QUANEX CORP, 8-A12B, 1995-06-09

QUANEX CORP
8-A12B, 1995-06-09
STEEL WORKS, BLAST FURNACES & ROLLING MILLS (COKE OVENS)

Previous: QUANEX CORP, 10-Q, 1995-06-09

Next: PAGE AMERICA GROUP INC, 424B3, 1995-06-09

<PAGE> 1

FORM 8-A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934

QUANEX CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
Delaware 38-1872178
(State of incorporation or organization) (I.R.S. Employee
Identification Number)

1800 West Loop South, Suite 1500, Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
</TABLE>

Securities to be registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
Title of each class Name of each exchange on which
to be so registered each class is to be registered
- -------------------------------------------------- --------------------------------------------
<S> <C>
6.88% Convertible Subordinated New York Stock Exchange, Inc.
Debentures due June 30, 2007
</TABLE>

If this Form relates to the registration of a class of debt securities
and is effective upon filing pursuant to General Instruction A.(c)(1), please
check the following box: [ ]

If this Form relates to the registration of a class of debt securities
and is to become effective simultaneously with the effectiveness of a
concurrent registration statement under the Securities Act of 1933 pursuant to
General Instruction A.(c)(2), please check the following box: [ ]

Securities to be registered pursuant to Section 12(g) of the Act:

None
(Title of Class)
<PAGE> 2
Item 1. Description of Registrant's Securities to Be Registered.

For a description of the 6.88% Convertible Subordinated Debentures
(the "Debentures") of Quanex Corporation, a Delaware corporation (the
"Company"), that are to be registered hereunder, see "Description of
Debentures" in the prospectus filed as part of the Company's Registration
Statement on Form S-3 (Securities and Exchange Commission File No. 33-47282).
The description is incorporated herein by reference.

<TABLE>
<CAPTION>
Item 2. Exhibits.
- -----------------
<S> <C>
4.1 Form of certificate for the Debentures.
4.2 Form of Indenture to be dated June 30, 1995, between the Company and Chemical Bank, as Trustee.
</TABLE>
<PAGE> 3
SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.

QUANEX CORPORATION

By /s/ Wayne M. Rose
---------------------------------------
Wayne M. Rose
Vice President and
Chief Financial Officer

Dated: June 7, 1995
<PAGE> 4
EXHIBIT INDEX
TO
FORM 8-A

<TABLE>
<S> <C>
Exhibit 4.1 Form of certificate of the debentures
Exhibit 4.2 Form of indenture to be dated June 30, 1995, between
the Company and Chemical Bank, as Trustee
</TABLE>

<PAGE> 1
Exhibit 4.1

[FORM OF FACE OF SECURITY]
No. $

Quanex Corporation

6.88% Convertible Subordinated Debentures Due 2007

Quanex Corporation (the "Issuer"), for value received hereby promises
to pay to ___________________________ or registered assigns the principal sum
of ________________________ Dollars at the Issuer's office or agency for said
purpose in the Borough of Manhattan, the City of New York, on June 30, 2007, in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, and to pay
interest, semi-annually on June 30 and December 31 of each year, on said
principal sum in like coin or currency at the rate per annum set forth above
beginning on the June 30 or December 31, as the case may be, next succeeding
the date on which the Securities are issued in exchange for shares of the
Issuer's 6.88% Cumulative Convertible Exchangeable Preferred Stock (the
"Preferred Stock") from the time of exchange of the Securities for the
Preferred Stock (the "Securities Exchange Date") or from the most recent date
to which interest has been paid or duly provided for on the Securities. The
interest so payable on any June 30 or December 31 will, except as otherwise
provided in the Indenture referred to on the reverse hereof, be paid to the
person in whose name this Security is registered at the close of business on
the June 15 or December 15 preceding such June 30 or December 31, whether or
not such day is a business day; provided, that interest may be paid, at the
option of the Issuer, by mailing a check therefor payable to the registered
Holder entitled thereto at his last address as it appears on the Security
register.

Reference is made to the further provisions set forth on the reverse
hereof, including without limitation provisions subordinating the payment of
principal of, premium, if any, on, and interest on the Securities to the
payment in full of all Senior Indebtedness as defined in said Indenture (as
defined on the reverse hereof) and provisions giving the Holder hereof the
right to convert this Security into Common Stock of the Issuer on the terms and
subject to the conditions and limitations referred to on the reverse hereof, as
more fully specified in said Indenture. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.

This Security shall not be valid or obligatory until the certificate
of authentication hereon shall have been duly signed by the Trustee acting
under the Indenture.

IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.

Dated:

[SEAL]
_____________________________________

_______________________________________________
<PAGE> 2
[FORM OF REVERSE OF SECURITY]

Quanex Corporation

6.88% Convertible Subordinated Debentures Due 2007

This Security is one of a duly authorized issue of debt securities of
the Issuer, limited up to the aggregate principal amount of $86,250,000 (except
as otherwise provided in the Indenture defined below), issued or to be issued
pursuant to an indenture dated as of June 30, 1995 (the "Indenture"), duly
executed and delivered by the Issuer to Chemical Bank, Trustee (the "Trustee").
Reference is hereby made to the Indenture and all indentures supplemental
thereto for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Trustee, the Issuer and the Holders
(the words "Holders" or "Holder" meaning the registered Holders or registered
Holder) of the Securities.

In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Securities and interest
accrued thereon may be declared due and payable, in the manner and with the
effect, and subject to the conditions, provided in the Indenture. The
Indenture provides that in certain events a declaration of default, a default,
or the consequences of either of them may be waived by the Holders of a
majority in the aggregate principal amount of the Securities then outstanding
except a default in the payment of principal of or premium, if any, on, or
interest on any of the Securities or in respect of the conversion of any of the
Securities. Any such consent or waiver by the Holder of this Security (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
Holder and upon all future Holders and owners of this Security and any Security
which may be issued in exchange or substitution hereof, whether or not any
notation thereof is made upon this Security or such other Securities.

The Indenture permits the Issuer and the Trustee, with the consent of
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the Holders of
the Securities; provided, that no such supplemental indenture shall (a) extend
the final maturity of any Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any amount payable on the redemption thereof or impair or affect the rights of
any Holder to institute suit for the payment or conversion thereof or
materially and adversely affect the right to convert the Securities into Common
Stock of the Issuer without the consent of the Holder of the Security so
affected; or (b) reduce the aforesaid percentage of Securities, the consent of
the Holders of which is required for any such supplemental indenture, without
the consent of the Holders of the applicable percentage of the Securities then
outstanding; provided, further, that no such supplemental indenture shall
modify any provisions of the Indenture so as to affect

-2-
<PAGE> 3
adversely the rights of any holder of Senior Indebtedness at the time
outstanding to the benefits of subordination thereunder without the consent of
such holder.

The indebtedness evidenced by the Securities is, to the extent and in
the manner provided in the Indenture, expressly subordinate and subject in
right of payment to the prior payment in full of all Senior Indebtedness of the
Issuer as defined in the Indenture, whether outstanding at the date of the
Indenture or thereafter incurred, and this Security is issued subject to the
provisions of the Indenture with respect to such subordination. Each Holder of
this Security, by accepting the same, agrees to and shall be bound by such
provisions and authorizes the Trustee in his behalf to take such action as may
be necessary or appropriate to effectuate the subordination so provided and
appoints the Trustee his attorney-in-fact for such purpose.

Subject to the provisions of the Indenture, the Holder of this
Security has the right, at his option, at any time until and including, but not
after the close of business on, June 30, 2007 (except that, in case this
Security or a portion hereof shall be called for redemption and the Issuer
shall not thereafter default in making due provision for the payment of the
redemption price, such right shall terminate with respect to this Security or
such portion hereof at the close of business on the fifth Business Day prior to
the date fixed for redemption), to convert the principal of this Security, or
any portion thereof which is $25 or an integral multiple of $25, into fully
paid and non-assessable shares of Common Stock of the Issuer, as said shares
shall be constituted at the date of conversion, at the conversion price of
$31.50 in principal amount of Securities for each share of such Common Stock,
or at the adjusted conversion price in effect at the date of conversion if an
adjustment has been made, determined as provided in the Indenture, upon
surrender of this Security to the Issuer at the office or agency of the Issuer
maintained for that purpose in the Borough of Manhattan, the City of New York,
together with a fully executed notice substantially in the form set forth at
the foot hereof that the Holder elects so to convert this Security (or any
portion hereof which is an integral multiple of $25) and, if this Security is
surrendered for conversion during the period between the close of business on
June 15 or December 15 in any year and the opening of business on the following
June 30 or December 31 and has not been called for redemption on a redemption
date within such period (or on such June 30 or December 31), or within five
days after such period, accompanied by payment of an amount equal to the
interest payable on such June 30 or December 31 on the principal amount of the
Security being surrendered for conversion. Except as provided in the preceding
sentence or as otherwise expressly provided in the Indenture, no payment or
adjustment shall be made on account of interest accrued on this Security (or
portion thereof) so converted or on account of any dividend or distribution on
any such Common Stock issued upon conversion, but the Holder of record of this
Security on June 15 or December 15 shall be entitled to receive interest on
such Security on the succeeding June 30 or December 31 notwithstanding the
conversion of such Security prior to such June 30 or December 31. If so
required by the Issuer or the Trustee, this Security, upon surrender for
conversion as aforesaid, shall be duly endorsed by, or be accompanied by
instruments of transfer, in form satisfactory to the Issuer, duly executed by,
the Holder or by his duly authorized attorney. The conversion price from time
to time in effect is subject to adjustment as provided in the Indenture. No

-3-
<PAGE> 4
fractions of shares will be issued on conversion, but an adjustment in cash
will be made for any fractional interest as provided in the Indenture.

No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Security at the place, times and rate, and in currency, herein
prescribed.

The Securities are issuable only as registered Securities without
coupons in denominations of $25 and any integral multiple of $25.

In the manner and subject to the limitations provided in the
Indenture, this Security may be exchanged for a like aggregate principal amount
of Securities of other authorized denominations.

Upon due presentment for registration of transfer of this Security at
the above-mentioned office or agency of the Issuer, a new Security or
Securities of authorized denominations, for a like aggregate principal amount,
will be issued to the transferee as provided in the Indenture. No service
charge shall be made for any such transfer, but the Issuer may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.

The Securities may be redeemed at the option of the Issuer as a whole,
or from time to time in part, on any date on or after June 30, 1995 prior to
maturity, upon mailing a notice of such redemption not less than 30 nor more
than 60 days prior to the date fixed for redemption to the Holders of
Securities to be redeemed, all as provided in the Indenture, at the following
redemption prices (expressed in percentages of the principal amount) together
in each case with accrued interest to the date fixed for redemption:

If redeemed during the twelve-month period beginning June 30, of each year
indicated,

<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1995 104.816
1996 104.128
1997 103.440
1998 102.752
1999 102.064
2000 101.376
2001 100.688
</TABLE>

and at 100% if redeemed on or after June 30, 2002. Notwithstanding the
foregoing, the Issuer may not redeem any Securities prior to June 30, 1996,
unless the last reported sales price per share of Common Stock of the Issuer in
its principal trading market is at least 150% of the conversion price then in
effect for any 20 trading days within a period of 30 consecutive trading days
ending no more than five days prior to the date of the notice of redemption.

-4-
<PAGE> 5
The Issuer will redeem twenty-five percent of the original principal
amount of Securities on each of June 30, 2005 and June 30, 2006, at a
redemption price of 100% of principal amount, plus accrued interest to the
redemption date. The Issuer may reduce the principal amount of Securities to
be redeemed pursuant to this paragraph by subtracting 100% of the principal
amount of any Securities that Securityholders have converted into Common Stock
that the Company has acquired and delivered to the Trustee for cancellation or
that the Company has redeemed other than pursuant to this paragraph. The
Company may so subtract the same Security only once. All or any part of the
cash in the sinking fund (not required by the Trustee for redemption of
Securities through the operation of the sinking fund) will be retained in the
sinking fund.

If at any time there shall occur any Change of Control as defined in
the Indenture with respect to the Issuer, each Holder of Securities shall have
the right, at such Holder's option but subject to the conditions set forth in
the Indenture, to require the Issuer to redeem on the Repurchase Date as
defined in the Indenture all or any part of such Holder's Securities that is
$25 or an integral multiple thereof at a Repurchase Price equal to the optional
redemption prices set forth herein plus accrued and unpaid interest to the
Repurchase Date.

Subject to payment by the Issuer of a sum sufficient to pay the amount
due on redemption, interest on this Security (or portion hereof if this
Security is redeemed in part) shall cease to accrue upon the date duly fixed
for redemption of this Security (or portion hereof if this Security is redeemed
in part).

The Issuer, the Trustee, and any authorized agent of the Issuer or the
Trustee, may deem and treat the registered Holder hereof as of the absolute
owner of this Security (whether or not this Security shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by
anyone other than the Issuer or the Trustee or any authorized agent of the
Issuer or the Trustee), for the purpose of receiving payment of, or an account
of, the principal hereof and premium, if any, and, subject to the provisions on
the face hereof, interest hereon and for all other purposes, and neither the
Issuer nor the Trustee nor any authorized agent of the Issuer or the Trustee
shall be affected by any notice to the contrary.

No recourse shall be had for the payment of the principal of or
premium, if any, or the interest on this Security, for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture or
any indenture supplemental thereto, against any incorporator, shareholder,
officer or director, as such, past, present or future, of the Issuer or of any
successor corporation, either directly or through the Issuer or any successor
corporation, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.

-5-
<PAGE> 6

[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

This is one of the Securities described in the within-mentioned
Indenture.

CHEMICAL BANK, as Trustee

___________________________________
Authorized Officer

[FORM OF CONVERSION NOTICE]

To: Quanex Corporation

The undersigned owner of this Security hereby: (i) irrevocably
exercises the option to convert this Security, or the portion hereof below
designated, for shares of Common Stock of Quanex Corporation in accordance with
the terms of the Indenture referred to in this Security and (ii) directs that
such shares of Common Stock deliverable upon the conversion, together with any
check in payment for fractional shares and any Security(ies) representing any
unconverted principal amount hereof, be issued and delivered to the registered
Holder hereof unless a different name has been indicated below. If shares are
to be delivered registered in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto. Any
amount required to be paid by the undersigned on account of interest
accompanies this Security.

Dated

___________________________________
Signature

-6-
<PAGE> 7
Fill in for registration of shares if to be delivered, and of Securities if to
be issued, otherwise than to and in the name of the registered Holder.

________________________________________
Social Security or Other
Taxpayer Identifying Number

___________________________________________
(Name)

___________________________________________
(Street Address)

___________________________________________
(City, State and Zip Code)
(Please print name and address)

Principal Amount to be Converted:
(if less than all)

$ _______________________________________

-7-

<PAGE> 1
Exhibit 4.2

================================================================================

QUANEX CORPORATION

and

CHEMICAL BANK, TRUSTEE

Indenture

Dated as of June 30, 1995

---------------------------------

Up to an aggregate of $86,250,000

6.88% Convertible Subordinated Debentures Due 2007

================================================================================
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE ONE
DEFINITIONS

SECTION 1.1 Certain Terms Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE TWO
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SECURITIES

SECTION 2.1 Authentication and Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.2 Execution of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.3 Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.4 Form, Denomination and Date of Securities;
Payments of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.5 Registration, Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . 16
SECTION 2.7 Cancellation of Securities; Destruction Thereof . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.8 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.9 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE THREE
COVENANTS OF THE ISSUER AND THE TRUSTEE

SECTION 3.1 Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.2 Offices for Payments, et . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.4 Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.5 Certificate to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.6 Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.7 Reports by the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.8 Reports by the Trustee; Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.9 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.10 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.11 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.12 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.13 Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.14 Accrual of Interest for Income Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . 22

</TABLE>

-i-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE FOUR
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

SECTION 4.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.2 Collection of Indebtedness by Trustee; Trustee
May Prove Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.3 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.4 Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.5 Restoration of Rights on Abandonment of Proceedings . . . . . . . . . . . . . . . . . . . 27
SECTION 4.6 Limitations on Suits by Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.7 Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.8 Control by Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.9 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE FIVE
CONCERNING THE TRUSTEE

SECTION 5.1 Duties and Responsibilities of the Trustee; During Default;
Prior to Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.2 Certain Rights of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.3 Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof . . . . . . . . . . . . . . . . 31
SECTION 5.4 Trustee and Agents May Hold Securities; Collections, et . . . . . . . . . . . . . . . . . 31
SECTION 5.5 Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.6 Compensation and Indemnification of Trustee and
Its Prior Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.7 Right of Trustee to Rely on Officers' Certificate, etc. . . . . . . . . . . . . . . . . . 32
SECTION 5.8 Persons Eligible for Appointment as Trustee . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.9 Resignation and Removal; Appointment of Successor Trustee . . . . . . . . . . . . . . . . 32
SECTION 5.10 Acceptance of Appointment by Successor Trustee . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.11 Merger, Conversion, Consolidation or Succession to
Business of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

ARTICLE SIX
CONCERNING THE SECURITYHOLDERS

SECTION 6.1 Evidence of Action Taken by Securityholders . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.2 Proof of Execution of Instruments and of Holding of
Securities; Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.3 Holders to be Treated as Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.4 Securities Owned by Issuer Deemed Not Outstanding . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.5 Right of Revocation of Action Taken . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

</TABLE>

-ii-
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE SEVEN
SUPPLEMENTAL INDENTURES

SECTION 7.1 Supplemental Indentures Without Consent of Securityholders . . . . . . . . . . . . . . . . 36
SECTION 7.2 Supplemental Indentures With Consent of Securityholders . . . . . . . . . . . . . . . . . 37
SECTION 7.3 Effect of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.4 Documents to Be Given to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.5 Notation on Securities in Respect of Supplemental Indentures . . . . . . . . . . . . . . . 38
SECTION 7.6 Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OR CONVEYANCE

SECTION 8.1 Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions . . . . . . . . . . . . . . . . . . 39
SECTION 8.2 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.3 Officers' Certificate and Opinion of Counsel to Trustee . . . . . . . . . . . . . . . . . 40

ARTICLE NINE
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

SECTION 9.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.2 Application by Trustee of Funds Deposited for
Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.3 Repayment of Moneys Held by Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.4 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Two Years . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ARTICLE TEN
MISCELLANEOUS PROVISIONS

SECTION 10.1 Incorporators, Stockholders, Officers and Directors of
Issuer Exempt from Individual Liability . . . . . . . . . . . . . . . . . . . 41
SECTION 10.2 Provisions of Indenture for the Sole Benefit of Parties
and Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.3 Successors and Assigns of Issuer Bound by Indenture . . . . . . . . . . . . . . . . . . . 42
SECTION 10.4 Notices and Demands on Issuer, Trustee and Securityholders . . . . . . . . . . . . . . . 42
SECTION 10.5 Officers' Certificates and Opinions of Counsel; Statements
to Be Contained Therein . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.6 Payments Due on Saturdays, Sundays and Holidays . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.7 Conflict of Any Provision of Indenture with Trust Indenture
Act of 1939 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.8 New York Law to Govern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.10 Effect of Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

</TABLE>

-iii-
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE ELEVEN
REDEMPTION OF SECURITIES

SECTION 11.1 Right of Optional Redemption; Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 11.2 Notice of Redemption; Partial Redemptions . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 11.3 Payment of Securities Called for Redemption . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.4 Exclusion of Certain Securities from Eligibility for
Selection for Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.5 Mandatory Redemption Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

ARTICLE TWELVE
SUBORDINATION OF SECURITIES

SECTION 12.1 Agreement to Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 12.2 Payments to Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 12.3 Subrogation of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 12.4 Authorization by Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 12.5 Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 12.6 Trustee's Relation to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 12.7 No Impairment of Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE THIRTEEN
CONVERSION OF SECURITIES

SECTION 13.1 Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 13.2 Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 13.3 Fractional Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.4 Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.5 Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 13.6 Continuation of Conversion Privilege in Case of
Reclassification, Change, Merger, Consolidation or
Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 13.7 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 13.8 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 13.9 Issuer to Provide Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 13.10 Disclaimer of Responsibility for Certain Matters . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.11 Return of Funds Deposited for Redemption of
Converted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

ARTICLE FOURTEEN
RIGHT TO REQUIRE REDEMPTION

SECTION 14.1 Right to Require Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 14.2 Notices; Method of Exercising Redemption Right, etc. . . . . . . . . . . . . . . . . . . 59
SECTION 14.3 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 14.4 Limitation on Right to Require Redemption . . . . . . . . . . . . . . . . . . . . . . . . 61

</TABLE>

-iv-
<PAGE> 6
THIS INDENTURE, dated as of June 30, 1995 between Quanex
Corporation, a Delaware corporation (the "Issuer") and Chemical Bank, a New
York corporation (the "Trustee"),

W I T N E S S E T H :

WHEREAS, the Issuer has duly authorized the issue of its 6.88%
Convertible Subordinated Debentures Due 2007 (the "Securities") and, to
provide, among other things, for the authentication, delivery and
administration thereof, the Issuer has duly authorized the execution and
delivery of this Indenture; and

WHEREAS, the Securities and the Trustee's certificate of
authentication shall be in substantially the following form:

[FORM OF FACE OF SECURITY]

No. $

Quanex Corporation

6.88% Convertible Subordinated Debentures Due 2007

Quanex Corporation (the "Issuer"), for value received hereby
promises to pay to ____________________________ or registered assigns the
principal sum of ____________________________ Dollars at the Issuer's office or
agency for said purpose in the Borough of Manhattan, the City of New York, on
June 30, 2007, in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, and to pay interest, semi-annually on June 30 and December 31 of each
year, on said principal sum in like coin or currency at the rate per annum set
forth above beginning on the June 30 or December 31, as the case may be, next
succeeding the date on which the Securities are issued in exchange for shares
of the Issuer's 6.88% Cumulative Convertible Exchangeable Preferred Stock (the
"Preferred Stock") from the time of exchange of the Securities for the
Preferred Stock (the "Securities Exchange Date") or from the most recent date
to which interest has been paid or duly provided for on the Securities. The
interest so payable on any June 30 or December 31 will, except as otherwise
provided in the Indenture referred to on the reverse hereof, be paid to the
person in whose name this Security is registered at the close of business on
the June 15 or December 15 preceding such June 30 or December 31, whether or
not such day is a business day; provided, that interest may be paid, at the
option of the Issuer, by mailing a check therefor payable to the registered
Holder entitled thereto at his last address as it appears on the Security
register.

Reference is made to the further provisions set forth on the
reverse hereof, including without limitation provisions subordinating the
payment of principal of, premium, if any, on, and interest on the Securities to
the payment in full of all Senior Indebtedness as defined in said Indenture (as
defined on the reverse hereof) and provisions giving the Holder hereof the
right to convert this Security into Common Stock of the Issuer on the terms and
subject to the conditions and limitations referred to on the reverse hereof, as
more fully specified in said Indenture. Such further
<PAGE> 7
provisions shall for all purposes have the same effect as though fully set
forth at this place.

This Security shall not be valid or obligatory until the
certificate of authentication hereon shall have been duly signed by the Trustee
acting under the Indenture.

IN WITNESS WHEREOF, the Issuer has caused this instrument to be
duly executed under its corporate seal.

Dated:

[SEAL]

________________________________________

[FORM OF REVERSE OF SECURITY]

Quanex Corporation

6.88% Convertible Subordinated Debentures Due 2007

This Security is one of a duly authorized issue of debt securities
of the Issuer, limited up to the aggregate principal amount of $86,250,000
(except as otherwise provided in the Indenture defined below), issued or to be
issued pursuant to an indenture dated as of June 30, 1995 (the "Indenture"),
duly executed and delivered by the Issuer to Chemical Bank, Trustee (the
"Trustee"). Reference is hereby made to the Indenture and all indentures
supplemental thereto for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Trustee, the Issuer and
the Holders (the words "Holders" or "Holder" meaning the registered Holders or
registered Holder) of the Securities.

In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all the Securities and
interest accrued thereon may be declared due and payable, in the manner and
with the effect, and subject to the conditions, provided in the Indenture. The
Indenture provides that in certain events a declaration of default, a default,
or the consequences of either of them may be waived by the Holders of a
majority in the aggregate principal amount of the Securities then outstanding
except a default in the payment of principal of or premium, if any, on, or
interest on any of the Securities or in respect of the conversion of any of the
Securities. Any such consent or waiver by the Holder of this Security (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
Holder and upon all future Holders and owners of this Security and any Security
which may be issued in exchange

-2-
<PAGE> 8
or substitution hereof, whether or not any notation thereof is made upon this
Security or such other Securities.

The Indenture permits the Issuer and the Trustee, with the consent
of the Holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the Holders of
the Securities; provided, that no such supplemental indenture shall (a) extend
the final maturity of any Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any amount payable on the redemption thereof or impair or affect the rights of
any Holder to institute suit for the payment or conversion thereof or
materially and adversely affect the right to convert the Securities into Common
Stock of the Issuer without the consent of the Holder of the Security so
affected; or (b) reduce the aforesaid percentage of Securities, the consent of
the Holders of which is required for any such supplemental indenture, without
the consent of the Holders of the applicable percentage of the Securities then
outstanding; provided, further, that no such supplemental indenture shall
modify any provisions of the Indenture so as to affect adversely the rights of
any holder of Senior Indebtedness at the time outstanding to the benefits of
subordination thereunder without the consent of such holder.

The indebtedness evidenced by the Securities is, to the extent and
in the manner provided in the Indenture, expressly subordinate and subject in
right of payment to the prior payment in full of all Senior Indebtedness of the
Issuer as defined in the Indenture, whether outstanding at the date of the
Indenture or thereafter incurred, and this Security is issued subject to the
provisions of the Indenture with respect to such subordination. Each Holder of
this Security, by accepting the same, agrees to and shall be bound by such
provisions and authorizes the Trustee in his behalf to take such action as may
be necessary or appropriate to effectuate the subordination so provided and
appoints the Trustee his attorney-in-fact for such purpose.

-3-
<PAGE> 9
the foot hereof that the Holder elects so to convert this Security (or any
portion hereof which is an integral multiple of $25) and, if this Security is
surrendered for conversion during the period between the close of business on
June 15 or December 15 in any year and the opening of business on the following
June 30 or December 31 and has not been called for redemption on a redemption
date within such period (or on such June 30 or December 31), or within five
days after such period, accompanied by payment of an amount equal to the
interest payable on such June 30 or December 31 on the principal amount of the
Security being surrendered for conversion. Except as provided in the preceding
sentence or as otherwise expressly provided in the Indenture, no payment or
adjustment shall be made on account of interest accrued on this security (or
portion thereof) so converted or on account of any dividend or distribution on
any such Common Stock issued upon conversion, but the Holder of record of this
Security on June 15 or December 15 shall be entitled to receive interest on
such Security on the succeeding June 30 or December 31 notwithstanding the
conversion of such Security prior to such June 30 or December 31. If so
required by the Issuer or the Trustee, this Security, upon surrender for
conversion as aforesaid, shall be duly endorsed by, or be accompanied by
instruments of transfer, in form satisfactory to the Issuer, duly executed by,
the Holder or by his duly authorized attorney. The conversion price from time
to time in effect is subject to adjustment as provided in the Indenture. No
fractions of shares will be issued on conversion, but an adjustment in cash
will be made for any fractional interest as provided in the Indenture.

No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Security at the place, times and rate,
and in currency, herein prescribed.

The Securities are issuable only as registered Securities without
coupons in denominations of $25 and any integral multiple of $25.

In the manner and subject to the limitations provided in the
Indenture, this Security may be exchanged for a like aggregate principal amount
of Securities of other authorized denominations.

Upon due presentment for registration of transfer of this Security
at the above-mentioned office or agency of the Issuer, a new Security or
Securities of authorized denominations, for a like aggregate principal amount,
will be issued to the transferee as provided in the Indenture. No service
charge shall be made for any such transfer, but the Issuer may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.

The Securities may be redeemed at the option of the Issuer as a
whole, or from time to time in part, on any date on or after June 30, 1995
prior to maturity, upon mailing a notice of such redemption not less than 30
nor more than 60 days prior to the date fixed for redemption to the Holders of
Securities to be redeemed, all as provided in the Indenture, at the following
redemption prices (expressed in percentages of the principal amount) together
in each case with accrued interest to the date fixed for redemption:

-4-
<PAGE> 10
If redeemed during the twelve-month period beginning June 30, of each year
indicated,

<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1995 104.816
1996 104.128
1997 103.440
1998 102.752
1999 102.064
2000 101.376
2001 100.688
</TABLE>

The Issuer will redeem twenty-five percent of the original
principal amount of Securities on each of June 30, 2005 and June 30, 2006, at a
redemption price of 100% of principal amount, plus accrued interest to the
redemption date. The Issuer may reduce the principal amount of Securities to
be redeemed pursuant to this paragraph by subtracting 100% of the principal
amount of any Securities that Securityholders have converted into Common Stock
that the Company has acquired and delivered to the Trustee for cancellation or
that the Company has redeemed other than pursuant to this paragraph. The
Company may so subtract the same Security only once. All or any part of the
cash in the sinking fund (not required by the Trustee for redemption of
Securities through the operation of the sinking fund) will be retained in the
sinking fund.

If at any time there shall occur any Change of Control as defined
in the Indenture with respect to the Issuer, each Holder of Securities shall
have the right, at such Holder's option but subject to the conditions set forth
in the Indenture, to require the Issuer to redeem on the Repurchase Date as
defined in the Indenture all or any part of such Holder's Securities that is
$25 or an integral multiple thereof at a Repurchase Price equal to the optional
redemption prices set forth herein plus accrued and unpaid interest to the
Repurchase Date.

Subject to payment by the Issuer of a sum sufficient to pay the
amount due on redemption, interest on this Security (or portion hereof if this
Security is redeemed in part) shall cease to accrue upon the date duly fixed
for redemption of this Security (or portion hereof if this Security is redeemed
in part).

-5-
<PAGE> 11
or the Trustee or any authorized agent of the Issuer or the Trustee), for the
purpose of receiving payment of, or an account of, the principal hereof and
premium, if any, and, subject to the provisions on the face hereof, interest
hereon and for all other purposes, and neither the Issuer nor the Trustee nor
any authorized agent of the Issuer or the Trustee shall be affected by any
notice to the contrary.

[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

This is one of the Securities described in the within-mentioned
Indenture.

CHEMICAL BANK, as Trustee

____________________________________
Authorized Officer

[FORM OF CONVERSION NOTICE]

To: Quanex Corporation

-6-
<PAGE> 12
thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.

Dated
____________________________________
Signature

Fill in for registration of shares if to be delivered, and of Securities if to
be issued, otherwise than to and in the name of the registered Holder.

____________________________________
Social Security or Other
Taxpayer Identifying Number

____________________________________
(Name)

____________________________________
(Street Address)

____________________________________
(City, State and Zip Code)
(Please print name and address)

Principal Amount to be Converted:
(if less than all)

$____________________________________

AND WHEREAS, all things necessary to make the Securities, when
executed by the Issuer and authenticated and delivered by the Trustee as in
this Indenture provided, the valid, binding and legal obligations of the
Issuer, and to constitute these presents a valid indenture and agreement
according to its terms, have been done;

NOW, THEREFORE:

In consideration of the premises and the purchases of the
Securities by the Holders thereof, the Issuer and the Trustee mutually covenant
and agree for the equal and proportionate benefit of the respective Holders
from time to time of the Securities as follows:

-7-
<PAGE> 13
ARTICLE ONE

DEFINITIONS

SECTION 1.1 Certain Terms Defined. The following terms (except
as otherwise expressly provided or unless the context otherwise clearly
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section. All other
terms used in this Indenture which are defined in the Trust Indenture Act of
1939 or the definitions of which in the Securities Act of 1933 are referred to
in the Trust Indenture Act of 1939 (except as herein otherwise expressly
provided or unless the context otherwise clearly requires), shall have the
meanings assigned to such terms in said Trust Indenture Act of 1939 and in said
Securities Act of 1933 as in force at the date of this Indenture. All
accounting terms used herein and not expressly defined shall have the meanings
given to them in accordance with generally accepted accounting principles, and
the term "generally accepted accounting principles" shall mean such accounting
principles which are generally accepted at the date or time of any computation
or at the date hereof. The words "herein", "hereof", and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision. The terms defined in this
Article include the plural as well as the singular.

"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect
to any Person means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

"Board of Directors" means either the Board of Directors of the
Issuer or any committee of such Board duly authorized to act hereunder.

"Business Day" means a day which in the city (or in any of the
cities, if more than one) where amounts are payable in respect of the
Securities, as specified on the face of the form of Security recited above, is
neither a legal holiday nor a day on which banking institutions are authorized
by law or regulation to close.

"Certificate of Designations" means the Certificate of
Designations of the Preferred Stock, as amended, on file with the Secretary of
State of the State of Delaware with respect to the Preferred Stock.

"Common Stock" means the Common Stock, par value $.50 per share,
of the Issuer as the same exists at the date of execution and delivery of this
Indenture or as such stock may be reconstituted from time to time.

"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
principally

-8-
<PAGE> 14
administered, which office is, at the date as of which this Indenture is dated,
located at 450 W. 33rd Street, 15th Floor, New York, New York 10001.

"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
the Issuer against fluctuations in currency values.

"Debenture Exchange Date" means the date on or after June 30, 1995
on which Securities issuable under this Indenture and issued and exchanged for
shares of Preferred Stock in accordance with the requirements of the
Certificate of Designations and Section 2.1 hereof.

"Event of Default" means any event or condition specified as such
in Section 4.1 which shall have continued for the period of time, if any,
therein designated.

"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
or other obligation of any Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise), or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.

"Holder", "Holder of Securities", "Securityholder" or other
similar terms mean the registered holder of any Security.

"Indebtedness" of any Person means any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person in respect of letters of credit or other
similar instruments (or reimbursement obligations with respect thereto), (iv)
all obligations of such Person to pay the deferred purchase price of property
or services, (v) all obligations of such Person as lessee under capital leases,
(vi) all Indebtedness of others secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of others Guaranteed by such Person and (viii) to the extent not
otherwise included, obligations under Currency Agreements and Interest Rate
Agreements.

"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented.

-9-
<PAGE> 15
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge arrangement, or or under which
the Issuer is a party or a beneficiary on the date hereof or becomes a party or
a beneficiary hereafter.

"Issuer" means Quanex Corporation, a Delaware corporation, and,
subject to Article Eight, its successors and assigns.

"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For purposes of this Indenture, the Issuer shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.

"Material Subsidiary" means any Subsidiary, including its
Subsidiaries, with respect to which the Company's and its other Subsidiaries'
investments in and advances to the Subsidiary exceed 10 percent of the total
stockholders' equity of the Company and its Subsidiaries consolidated as of the
end of the Company's most recently completed fiscal year.

"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.

"Officers' Certificate" means a certificate signed by two
Officers, one of whom must be the Chairman, President or a Vice President, or
by an Officer and an Assistant Treasurer or an Assistant Secretary of the
Issuer and delivered to the Trustee. Each such certificate shall comply with
Section 314 of the Trust Indenture Act of 1939 and include the statements
provided for in Section 10.5 and to the extent required thereby.

"Opinion of Counsel" means an opinion in writing signed by legal
counsel (i) who may be an employee of or counsel to the Issuer or who may be
other counsel and (ii) who shall be satisfactory to the Trustee. Each such
opinion shall comply with Section 314 of the Trust Indenture Act of 1939 and
include the statements provided for in Section 10.5 if and to the extent
required hereby.

"Original Issue Date" of any Security (or portion thereof) means
the earlier of (a) the date of such Security or (b) the date of any Security
(or portion thereof) for which such Security was issued (directly or
indirectly) on registration of transfer, exchange or substitution.

"Outstanding", when used with reference to Securities, shall,
subject to the provisions of Section 6.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:

(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;

-10-
<PAGE> 16
(b) Securities, or portions thereof, for the payment or
redemption of which moneys or direct non-callable obligations of the
United States of America backed by its full faith and credit in the
necessary amount shall have been deposited in trust with the Trustee
or with any paying agent (other than the Issuer) or shall have been
set aside, segregated and held in trust by the Issuer (if the Issuer
shall act as its own paying agent), provided that if such Securities
are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as herein provided, or provision
satisfactory to the Trustee shall have been made for giving such
notice; and

(c) Securities in substitution for which other Securities
shall have been authenticated and delivered, or which shall have been
paid, pursuant to the terms of Section 2.6 (unless proof satisfactory
to the Trustee is presented that any of such Securities is held by a
person in whose hands such Security is a legal, valid and binding
obligation of the Issuer), Securities converted into Common Stock
pursuant hereto and Securities not deemed outstanding pursuant to
Section 11.2.

"Preferred Stock" means the ____% Cumulative Convertible
Exchangeable Preferred Stock, liquidation preference $250 per share, of the
Issuer.

"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

"Principal" wherever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include "and premium, if
any".

"Responsible Officer" when used with respect to the Trustee means
any officer of the Trustee assigned by the Trustee to administer its corporate
trust matters.

"Security" or "Securities" means any Debenture or Debentures, as
the case may be, authenticated and delivered under this Indenture.

"Senior Indebtedness" means the principal of (and premium, if any)
and interest on all Indebtedness of the Issuer (other than the Securities),
including principal and interest (including, without limitation, any interest
that would accrue but for the filing of a petition initiating any proceeding
referred to in clause (ii) of Section 12.2 hereof) on such Indebtedness,
whether outstanding on the date of issuance of the Securities or thereafter
created, incurred or assumed; provided that Senior Indebtedness shall not
include (i) the Issuer's 9 1/8% Convertible Debentures Due 2008, which rank
pari passu with the Securities, (ii) Indebtedness of or monies owed by the
Issuer for compensation to employees or for goods or materials purchased or for
services rendered in the ordinary course of business, (iii) Indebtedness of the
Issuer to any Affiliate and (iv) any other Indebtedness which by the terms of
the instrument creating or evidencing the same are specifically designated as
not being senior in right of payment to the Securities.

-11-
<PAGE> 17
"Subsidiary" means a corporation or other business entity, a
majority of whose voting stock is owned by the Issuer or a Subsidiary. Voting
stock is capital stock having voting power under ordinary circumstances to
elect directors.

"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.

"Trustee" means the entity identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Five, shall also
include any successor trustee.

"Trust Indenture Act of 1939" means the Trust Indenture Act of
1939 as amended and as in force at the date as of which this Indenture was
originally executed.

ARTICLE TWO

ISSUE, EXECUTION, FORM AND
REGISTRATION OF SECURITIES

SECTION 2.1 Authentication and Delivery of Securities.

(a) The Trustee shall authenticate and deliver
Securities for original issue upon a written order of the Issuer
signed by two Officers or by an Officer and an Assistant Treasurer
or an Assistant Secretary of the Issuer on or after the Debenture
Exchange Date.

(b) The aggregate principal amount of Securities
outstanding at any time may not exceed the amount specified in the
form of Security hereinabove cited, except as provided in Section
2.6.

(c) The Trustee's authentication and delivery of
Securities on or after the Debenture Exchange Date pursuant to
paragraph 2.1(a) shall be further conditioned upon receipt of each
of the following in form and substance satisfactory to the Trustee
on or after the Debenture Exchange Date:

A. An Officers' Certificate to effect that:

(1) All conditions required to be satisfied
under the Certificate of Designations for the exchange of
the Securities for shares of Preferred Stock have been so
satisfied on or prior to the date of the Officers'
Certificate and specifying that full dividends to the
Debenture Exchange Date have been paid on the Preferred
Stock.

-12-
<PAGE> 18
(2) This Indenture has been duly qualified
under the Trust Indenture Act on or prior to the Debenture
Exchange Date; and

(3) No Event of Default under this Indenture
shall have occurred and be continuing (after giving effect to the
exchange of Securities for shares of Preferred Stock) or if any
such Event of Default shall have occurred and be continuing, to
specify such Event of Default.

B. An Opinion or Opinions of Counsel to the effect that:

(1) The execution and delivery of this Indenture,
issuance of the Securities and the fulfillment of the terms herein
and therein contemplated will not conflict with, or constitute a
breach of or default under, the charter or by-laws of the Issuer
or of any of the Subsidiaries, or any agreement, indenture,
evidence of indebtedness, mortgage, deed of trust or other
agreement or instrument known to such counsel to which the Issuer
or any of the Subsidiaries is a party or by which any of them or
their properties is bound, or any law, administrative regulation,
rule, judgment, order or decree known to such counsel to be
applicable to the Issuer or any of the Subsidiaries or any of its
or their properties;

(2) This Indenture has been duly authorized, executed
and delivered by the Issuer, and is a legal, valid and binding
agreement of the Issuer enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors'
rights generally and that the remedy of specific performance and
injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;

(3) All legally required proceedings by the Issuer in
connection with the authorization and issuance of the Securities
have been duly taken and all orders, consents or other
authorizations or approvals of any public board or body legally
required for the validity of the Securities have been obtained;

(4) This Indenture has been duly qualified under the
Trust Indenture Act of 1939;

(5) The Securities have been duly authorized,
executed and delivered and when authenticated in accordance with
the terms of this Indenture and delivered in exchange for the
outstanding shares of Preferred Stock, will be legal, valid and
binding

-13-
<PAGE> 19
obligations of the Issuer enforceable in accordance with their
terms, except as enforceability may be limited to bankruptcy,
insolvency, reorganization or similar laws affecting creditors'
rights generally and that the remedy of specific performance and
injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought; and

(6) The Securities have been duly registered under
the Securities Act of 1933, as amended.

In rendering the foregoing opinions, such counsel shall be
entitled to rely on certificates of public officials and of officers of the
Issuer with respect to factual matters and such opinion may contain such
qualifications and exceptions as may be reasonably acceptable to the Trustee.

C. A copy of the resolutions adopted by the Board of
Directors, certified by the secretary or the assistant secretary of the Issuer,
authorizing the execution, authentication and delivery of the Indenture and the
Securities.

D. Such other documents as the Trustee may reasonably request.

SECTION 2.2 Execution of Securities. The Securities shall be
signed on behalf of the Issuer by both (a) its Chairman of the Board of
Directors or any Vice Chairman of the Board of Directors or its President or
any Vice President (whether or not designated by a number or numbers or a word
or words added before or after the title "Vice President") and (b) by its Chief
Financial Officer or its Secretary or any Assistant Secretary, under its
corporate seal which may, but need not, be attested. Such signatures may be
the manual or facsimile signatures of the present or any future such officers.
The seal of the Issuer may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted or otherwise reproduced on the Securities.
Typographical and other minor errors or defects in any such reproduction of the
seal or any such signature shall not affect the validity or enforceability of
any Security which has been duly authenticated and delivered by the Trustee.

In case any officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer,
such Security nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Security had not ceased to be such officer of
the Issuer; and any Security may be signed on behalf of the Issuer by such
person as, at the actual date of the execution of such Security, shall be the
proper officers of the Issuer, although at the date of the execution and
delivery of this Indenture any such person was not such officer.

SECTION 2.3 Certificate of Authentication. Only such Securities
as shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by manual signature of one of its
authorized officers, shall be entitled to the benefits of this Indenture or be
valid or obligatory for any

-14-
<PAGE> 20
purpose. Such certificate by the Trustee upon any Security executed by the
Issuer shall be conclusive evidence that the Security so authenticated has been
duly authenticated and delivered hereunder and that the Holder is entitled to
the benefits of this Indenture.

SECTION 2.4 Form, Denomination and Date of Securities; Payments
of Interest. The Securities and the Trustee's certificates of authentication
shall be substantially in the form recited above. The Securities shall be
issuable as registered securities without coupons and in denominations provided
for in the form of Security above recited. The Securities shall be numbered,
lettered or otherwise distinguished in such manner or in accordance with such
plans as the officers of the Issuer executing the same may determine with the
approval of the Trustee.

Any of the Securities may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Securities are admitted to trading, or to conform to general usage.

Each Security shall be dated the date of its authentication, shall
bear interest from the applicable date and shall be payable on the dates
specified on the face of the form of Security recited above.

The person in whose name any Security is registered at the close
of business on any record date with respect to any interest payment date set
forth on the reverse of the form of Security included herein ("Interest Payment
Date") shall be entitled to receive the interest, if any, payable on such
Interest Payment Date notwithstanding any transfer or exchange or such Security
subsequent to the record date and prior to such Interest Payment Date, or,
subject, in the case of conversion of such Security during such period, to
Section 13.2, except if and to the extent the Issuer shall default in the
payment of the interest due on such Interest Payment Date, in which case such
defaulted interest shall be paid to the persons in whose names outstanding
Securities are registered at the close of business on a subsequent record date
(which shall be not less than five Business Days prior to the date of payment
of such defaulted interest) established by notice given by mail by or on behalf
of the Issuer to the Holders of Securities not less that 15 days preceding such
subsequent record date or in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, if, after notice
given by the Issuer to the Trustee of the proposed payment, such payment shall
be deemed practicable by the Trustee.

SECTION 2.5 Registration, Transfer and Exchange. The Issuer will
keep at each office or agency to be maintained for the purpose as provided in
Section 3.2 a register or registers in which, subject to such reasonable
regulations as it may prescribe, it will register, and will register the
transfer of, Securities as in this Article provided. Such register shall be in
written form in the English language or in any other form

-15-
<PAGE> 21
capable of being converted into such form within a reasonable time. At all
reasonable times such register or registers shall be open for inspection by the
Trustee.

Upon due presentation for registration of transfer of any
Securities at each such office or agency, the Issuer shall execute and the
Trustee shall authenticate and deliver in the name of the transferee or
transferees a new Security or Securities in authorized denominations for a like
aggregate principal amount.

Any Security or Securities may be exchanged for a Security or
Securities in other authorized denominations, in an equal aggregate principal
amount. Securities to be exchanged shall be surrendered at each office or
agency to be maintained by the Issuer for the purpose as provided in Section
3.2, and the Issuer shall execute and the Trustee shall authenticate and
deliver in exchange therefor the Security or Securities which the
Securityholder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously outstanding.

All Securities presented for registration of transfer, exchange,
conversion, redemption or payment shall (if so required by the Issuer or the
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Issuer and the Trustee duly
executed by, the Holder or his attorney duly authorized in writing.

The Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Securities. No service charge shall be
made for any such transaction.

The Issuer shall not be required to exchange or register a
transfer of (a) any Securities for a period of 15 days next preceding the first
mailing of notice of redemption of Securities to be redeemed or (b) any
Securities selected, called or being called for redemption except, in the case
of any Security where notice has been given that such Security is to be
redeemed in part, the portion thereof not so to be redeemed.

All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.

SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become
mutilated, defaced or be apparently destroyed, lost or stolen, the Issuer in
its discretion may execute, and upon the written request of the Issuer, the
Trustee shall authenticate and deliver, a new Security, bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated
or defaced Security, or in lieu of and substitution for the Security so
apparently destroyed, lost or stolen. In every case the applicant for a
substitute Security shall furnish to the Issuer and to the Trustee and any
agent of the Issuer or the Trustee such security or indemnity as may be
required by them to indemnify and defend and save each of them harmless and, in
every case of destruction,

-16-
<PAGE> 22
loss or theft evidence to their satisfaction of the apparent destruction, loss
or theft of such Security and of the ownership thereof.

Upon the issuance of any substitute Security, the Issuer may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith. In case
any Security which has matured or is about to mature, or has been called for
redemption in full, or is being surrendered for conversion in full shall become
mutilated or defaced or be apparently destroyed, lost or stolen, the Issuer
may, instead of issuing a substitute Security, with the Holder's consent pay or
authorize the payment of the same or the conversion of such Security (without
surrender thereof except in the case of a mutilated or defaced Security), if
the applicant for such payment or conversion shall furnish to the Issuer and to
the Trustee and any agent of the Issuer or the Trustee such security or
indemnity as any of them may require to save each of them harmless from all
risks, however remote, and, in every case of apparent destruction, loss or
theft, the applicant shall also furnish to the Issuer and the Trustee and any
agent of the Issuer or the Trustee evidence to their satisfaction of the
apparent destruction, loss or theft of such Security and of the ownership
thereof.

Every substitute Security issued pursuant to the provisions of
this Section by virtue of the fact that any Security is apparently destroyed,
lost or stolen shall constitute an additional contractual obligation of the
Issuer, whether or not the apparently destroyed, lost or stolen Security shall
be at any time enforceable by anyone and shall be entitled to all the benefits
of (but shall be subject to all the limitations of rights set forth in) this
Indenture equally and proportionately with any and all other Securities duly
authenticated and delivered hereunder. All Securities shall be held and owned
upon the express condition that, to the extent permitted by law, the foregoing
provisions are exclusive with respect to the replacement or payment or
conversion of mutilated, defaced, or apparently destroyed, lost or stolen
Securities and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.

SECTION 2.7 Cancellation of Securities; Destruction Thereof. All
Securities surrendered for payment, redemption, registration of transfer or
exchange or conversion if surrendered to the Issuer or any agent of the Issuer
or the Trustee, shall be delivered to the Trustee for cancellation or, if
surrendered to the Trustee, shall be canceled by it; and no Securities shall be
issued in lieu thereof except as expressly permitted by any of the provisions
of this Indenture. The Trustee shall destroy canceled Securities held by it
and deliver a certificate of destruction to the Issuer. If the Issuer shall
acquire any of the Securities, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Securities
unless and until the same are delivered to the Trustee for cancellation.

SECTION 2.8 Temporary Securities. Pending the preparation of
definitive Securities, the Issuer may execute and the Trustee shall
authenticate and deliver temporary Securities (printed, lithographed,
typewritten or otherwise reproduced, in

-17-
<PAGE> 23
each case in form satisfactory to the Trustee). Temporary Securities shall be
issuable as registered securities without coupons, of any authorized
denomination, and substantially in the form of the definitive Securities but
with such omissions, insertions and variations as may be appropriate for
temporary Securities, all as may be determined by the Issuer with the
concurrence of the Trustee. Temporary Securities may contain such references
to any provisions of this Indenture as may be appropriate. Every temporary
Security shall be executed by the Issuer and be authenticated by the Trustee
upon the same conditions and in substantially the same manner, and with like
effect, as the definitive Securities. Without unreasonable delay the Issuer
shall execute and shall furnish definitive Securities and thereupon temporary
securities may be surrendered in exchange therefor without charge at each
office or agency to be maintained by the Issuer for the purpose pursuant to
Section 3.2, and the Trustee shall authenticate and deliver in exchange for
such temporary Securities a like aggregate principal amount of definitive
Securities of authorized denominations. Until so exchanged the temporary
Securities shall be entitled to the same benefits under this Indenture as
definitive Securities.

SECTION 2.9 Computation of Interest. Interest on the Securities
shall be computed on the basis of a 360-day year of twelve 30-day months.

ARTICLE THREE

COVENANTS
OF
THE ISSUER AND THE TRUSTEE

SECTION 3.1 Payment of Principal and Interest. The Issuer
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of, and interest on, each of the Securities at the place or
places, at the respective times and in the manner provided in the Securities.
Each payment of Principal and installment of interest on the Securities may be
paid by mailing checks for such interest payable to or upon the written order
of the Holders of Securities entitled thereto as they shall appear on the
registry books of the Issuer.

SECTION 3.2 Offices for Payments, etc. So long as any of the
Securities remain outstanding, the Issuer will maintain in the Borough of
Manhattan, The City of New York, the following: (a) an office or agency where
the Securities may be presented for payment, (b) an office or agency where the
Securities may be presented for registration of transfer and for exchange and
conversion as in this Indenture provided and (c) an office or agency where
notices and demands to or upon the Issuer in respect of the Securities or of
this Indenture may be served. The Issuer will give to the Trustee written
notice of the location of any such office or agency and of any change of
location thereof. The Issuer hereby initially designates the Corporate Trust
Office of the Trustee as the office or agency for each such purpose. In case
the Issuer shall fail to maintain any such office or agency or shall fail to
give such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the
Corporate Trust Office.

-18-
<PAGE> 24
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee.
The Issuer, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will promptly appoint, in the manner provided in Section 5.9, a
Trustee.

SECTION 3.4 Paying Agents. Whenever the Issuer shall appoint a
paying agent other than the Trustee, it will cause such paying agent to execute
and deliver to the Trustee an instrument in which such agent shall agree with
the Trustee, subject to the provisions of this Section:

(a) that it will hold all sums received by it as such
agent for the payment of the Principal of or interest on the
Securities (whether such sums have been paid to it by the Issuer
or by any other obligor on the Securities) in trust for the
benefit of the Holders of the Securities or of the Trustee.

(b) that it will give the Trustee notice of any
failure by the Issuer (or by any other obligor on the Securities)
to make any payment of the Principal of or interest on the
Securities when the same shall be due and payable, and

(c) pay any such sums so held in trust by it to the
Trustee upon the Trustee's written request at any time during the
continuance of the failure referred to in clause (b) above.

The Issuer will, on or prior to each due date of the Principal of
or interest on the Securities, deposit with the paying agent a sum sufficient
to pay such Principal or interest, and (unless such paying agent is the
Trustee) the Issuer will promptly notify the Trustee of any failure to take
such action.

If the Issuer shall act as its own paying agent, it will, on or
before each due date of the Principal of or interest on the Securities, set
aside, segregate and hold in trust for the benefit of the Holders of the
Securities a sum sufficient to pay such Principal or interest so becoming due.
The Issuer will promptly notify the Trustee of any failure to take such action.

Anything in this Section to the contrary notwithstanding, the
Issuer may at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Issuer or any paying agent hereunder,
as required by this Section, such sums to be held by the Trustee upon the
trusts herein contained.

Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section are subject to the
provisions of Sections 9.3 and 9.4.

SECTION 3.5 Certificate to Trustee. The Issuer will furnish to
the Trustee on or before April 1 in each year a brief certificate (which need
not comply with Section 10.5) from the principal executive, financial or
accounting officer of the Issuer as to his or her knowledge of the Issuer's
compliance with all conditions and covenants under the Indenture (such
compliance to be determined without regard to any period of grace or
requirement of notice provided under the Indenture).

-19-
<PAGE> 25
SECTION 3.6 Securityholder Lists. The Trustee shall preserve in
as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If and so long as the
Trustee shall not be the Security registrar, the Issuer will furnish or cause
to be furnished to the Trustee a list in such form as the Trustee may
reasonably require of the names and addresses of the Holders of the Securities
pursuant to Section 312 of the Trust Indenture Act of 1939 (a) semi-annually
not more than 15 days after each record date for the payment of semi-annual
interest on the Securities, as hereinabove specified, as of such record date,
and (b) at such other times as the Trustee may request in writing, within
thirty days after receipt by the Issuer of any such request as of a date not
more than 15 days prior to the time such information is furnished.

SECTION 3.7 Reports by the Issuer. (a) The Issuer shall file
with the Trustee, within 15 days after the Issuer is required to file the same
with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Issuer may be
required to file with the Commission pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934. The Issuer also shall comply with the
other provisions of Section 314(a) of the Trust Indenture Act of 1939.

(b) So long as the Securities remain outstanding, the Issuer
shall cause its annual report to stockholders and any quarterly or other
financial reports furnished by it to stockholders to be mailed to the Holders
at their addresses appearing in the register of Securities maintained by the
registrar.

SECTION 3.8 Reports by the Trustee; Notice of Defaults. Any
Trustee's report required under Section 313(a) of the Trust Indenture Act of
1939 shall be transmitted on or before the first date for the regular payment
of semi-annual interest on the Securities next succeeding May 15 in each year,
and shall be dated as of a date convenient to the Trustee no more than 60 nor
less than 45 days prior thereto (unless such May 15 is less than 45 days prior
to such Interest Payment Date, in which case such report shall be (a) so
transmitted on or before the second such Interest Payment Date next succeeding
such May 15 and (b) as of a date determined as provided above).

If an Event of Default occurs and is continuing, the Trustee shall
mail to each Securityholder notice of the Event of Default within 90 days after
the Trustee has obtained such knowledge. Except in the case of an Event of
Default in payment of Principal of or interest on any Security, including any
payment required by Section 11.1 or Section 11.5 hereof, the Trustee may
withhold the notice if and so long as the board of directors, the executive
committee or a committee of Responsible Officers of the Trustee in good faith
determines that withholding the notice is in the interests of Securityholders.

SECTION 3.9 Corporate Existence. Subject to Article Eight, the
Issuer will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate, partnership or
other existence of each Material Subsidiary in accordance with the respective
organizational documents of each Material Subsidiary and the rights (charter
and statutory) and material franchises of the Issuer and its Material
Subsidiaries; provided, however, that the Issuer shall not be required to
preserve any such right or franchise, or the corporate, partnership or

-20-
<PAGE> 26
other existence of any Material Subsidiary, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of the Issuer and its Subsidiaries taken as a whole and that
the loss thereof is not, and will not be, adverse in any material respect to
the Holders.

SECTION 3.10 Payment of Taxes and Other Claims. The Issuer will
pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (1) all material taxes, assessments and governmental charges
levied or imposed upon the Issuer or any Subsidiary or upon the income, profits
or property of the Issuer or any Subsidiary and (2) all lawful claims for
labor, materials and supplies, which, if unpaid, might by law become a material
Lien upon the property of the Issuer or any Subsidiary; provided, however, that
the Issuer shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which appropriate provision has been made.

SECTION 3.11 Notice of Defaults. In the event that any
Indebtedness of the Issuer, or any of its Material Subsidiaries is declared due
and payable before its maturity because of the occurrence of any default (or
any event which, with notice or the lapse of time, or both, shall constitute
such default) under such Indebtedness, the Issuer will promptly give written
notice to the Trustee of such default and declaration.

SECTION 3.12 Maintenance of Properties. The Issuer will cause
all material properties owned by or leased to it or any Subsidiary and used or
useful in the conduct of its business or the business of any Subsidiary to be
maintained and kept in normal condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereto or thereof, all as
in the judgment of the Issuer may be necessary, so that the business carried on
in connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the Issuer
or any Subsidiary from discontinuing the use, operation or maintenance of any
of such properties, or disposing of any of them, if such discontinuance or
disposal is, in the judgment of the Board of Directors or of the board of
directors, board of trustees or managing partners of the Subsidiary concerned,
or of an officer (or other agent employed by the Issuer or of any of its
Subsidiaries) of the Issuer or such Subsidiary having managerial responsibility
for any such property, desirable in the conduct of the business of the Issuer
or any Subsidiary, and if such discontinuance or disposal is not
disadvantageous in any material respect to the Holders.

SECTION 3.13 Waiver of Stay, Extension or Usury Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law, which
would prohibit or forgive the Issuer from paying all or any portion of the
Principal of and/or interest on the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Issuer hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.

-21-
<PAGE> 27
SECTION 3.14 Accrual of Interest for Income Tax Purposes. The
Issuer covenants and agrees for the benefit of each Holder of Securities that
(i) the Issuer will not claim any deduction for or otherwise report any accrual
of interest (including original issue discount) on the Securities at a rate
other than at the stated interest rate plus any amount of original issue
discount arising by reason of the fair market value on the issue date being
less than the par amount of the Securities in any Federal income tax return,
claim for refund, or other statement, report or submission made to the Internal
Revenue Service, and (ii) the Issuer will make any election (or take any
similar action) which may become necessary to comply with clause (i). At the
request of any Holder of Securities, the Issuer will join at the Holder's
expense in the submission to the Internal Revenue Service of a request for a
ruling that interest (including original issue discount) will accrue on such
Securities at such rate. In addition, the Issuer will cooperate with any
Holder of the Securities in any litigation, appeal or other proceeding relating
to the accrual of interest (including original issue discount) on the
Securities. To the extent possible, the principles of this paragraph shall
also apply with respect to State and local income taxes.

ARTICLE FOUR

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

SECTION 4.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default. Each of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body) shall constitute an Event of Default hereunder:

(a) default in the payment of any installment of
interest upon any of the Securities as and when the same shall
become due and payable, and continuance of such default for a
period of 30 days; or

(b) default in the payment of all or any part of the
Principal on any of the Securities as and when the same shall
become due and payable either at maturity, upon any redemption or
required repurchase, by declaration or otherwise; or

(c) failure on the part of the Issuer duly to observe
or perform any other of the covenants or agreements on the part of
the Issuer in the Securities or in this Indenture contained for a
period of 60 days after the date on which written notice
specifying such failure, stating that such notice is a "Notice of
Default" hereunder and demanding that the Issuer remedy the same,
shall have been given by registered or certified mail, return
receipt requested, to the Issuer by the Trustee, or the Issuer and
the Trustee by the Holders of at least 25% in aggregate principal
amount of the Securities at the time Outstanding; or

(d) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Issuer or any
Material Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar

-22-
<PAGE> 28
law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Issuer or any Material Subsidiary or for any
substantial part of their property or ordering the winding up or
liquidation of their affairs, and such decree or order shall
remain unstayed and in effect for a period of 90 consecutive days;
or

(e) the Issuer or any Material Subsidiary shall
commence a voluntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Issuer or any
Material Subsidiary or for any substantial part of their property,
or make any general assignment for the benefit of creditors; or

(f) an event of default, as defined in any indenture
or instrument evidencing or under which the Issuer or any Material
Subsidiary has at the date of this Indenture or shall hereafter
have outstanding at least $5,000,000 aggregate principal amount of
Indebtedness, shall happen and be continuing and such Indebtedness
shall have been accelerated so that the same shall be or become
due and payable prior to the date on which the same would
otherwise have become due and payable, and such acceleration shall
not be rescinded or annulled within thirty days after notice
thereof shall have been given to the Issuer or any Material
Subsidiary by the Trustee (if such event be known to it), or to
the Issuer or any Material Subsidiary and the Trustee by the
Holders of at least 25% in aggregate principal amount of the
Securities at the time Outstanding; provided that if such event of
default under such indenture or instrument shall be remedied or
cured by the Issuer or any Material Subsidiary or waived by the
Holders of such Indebtedness, then the Event of Default hereunder
by reason thereof shall be deemed likewise to have been thereupon
remedied, cured or waived without further action upon the part of
either the Trustee or any of the Securityholders, and provided
further however that, subject to the provisions of Sections 5.1
and 5.2 the Trustee shall not be charged with knowledge of any
such default unless written notice thereof shall have been given
to a Responsible Officer of the Trustee by the Issuer or any
Material Subsidiary, by a holder or an agent of a holder of any
such Indebtedness, by the trustee then acting under any indenture
or other instrument under which such default shall have occurred,
or by the Holders of not less than 25% in the aggregate principal
amount of the Securities at the time Outstanding.

If an Event of Default (other than an Event of Default specified in
subparagraph (e)) occurs and is continuing, unless the Principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities
then Outstanding hereunder, by notice in writing to the Issuer (and to the
Trustee if given by Securityholders), may declare the entire Principal of all
the Securities and the interest accrued thereon, to be due and payable
immediately, and upon any such declaration the same shall become immediately
due and payable. If an Event of Default specified in subparagraph (e) occurs,
all unpaid Principal and accrued interest on the Securities then Outstanding
shall ipso facto become and be immediately due and payable without any
declaration or other act on

-23-
<PAGE> 29
the part of the Trustee or any Securityholder. This provision, however, is
subject to the condition that if, at any time after the Principal of the
Securities shall have been so declared due and payable, and before any judgment
or decree for the payment of the moneys due shall have been obtained or entered
as hereinafter provided, the Issuer or any Subsidiary shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all the Securities and the Principal of any and all Securities
which shall have become due otherwise than by acceleration (with interest upon
such principal and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest, at the same rate as
the rate of interest specified in the Securities, to the date of such payment
or deposit) and such amount as shall be sufficient to cover payments due the
Trustee under Section 5.6 hereof and each predecessor Trustee, their respective
agents, attorneys and counsel, and all other reasonable expenses and
liabilities incurred, and all reasonable advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith, and if any
and all Events of Default under the Indenture, other than the non-payment of
the Principal of Securities which shall have become due by acceleration, shall
have been cured, waived or otherwise remedied as provided herein, then and in
every such case the Holders of a majority in aggregate principal amount of the
Securities then Outstanding, by written notice to the Issuer and to the
Trustee, may waive all defaults and rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.

SECTION 4.2 Collection of Indebtedness by Trustee; Trustee May
Prove Debt. The Issuer covenants that (a) in case default shall be made in the
payment of any installment of interest on any of the Securities when such
interest shall have become due and payable, and such default shall have
continued for a period of 30 days or (b) in case default shall be made in the
payment of all or any part of the Principal of any of the Securities when the
same shall have become due and payable, whether upon maturity or upon any
redemption or by declaration or otherwise, then upon demand of the Trustee, the
Issuer will pay to the Trustee for the benefit of the Holders of the Securities
the whole amount that then shall have become due and payable on all such
Securities for Principal and/or interest, as the case may be (with interest to
the date of such payment upon the overdue principal and, to the extent that
payment of such interest is enforceable under applicable law, on overdue
installments of interest at the same rate as the rate of interest specified in
the Securities); and in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including payments
due the Trustee under Section 5.6 hereof and each predecessor Trustee, their
respective agents, attorneys and counsel, and any reasonable expenses and
liabilities incurred, and all reasonable advances made, by the Trustee and each
predecessor Trustee except as a result of its negligence or bad faith.

Until such demand is made by the Trustee, the Issuer may pay the
Principal of and interest on the Securities to the registered Holders, whether
or not the Securities be overdue.

In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at law
or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against

-24-
<PAGE> 30
the Issuer or other obligor upon the Securities and collect in the manner
provided by law out of the property of the Issuer or other obligor upon the
securities, wherever situated the moneys adjudged or decreed to be payable.

In case there shall be pending proceedings relative to the
Issuer or any other obligor upon the securities under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or takes possession of the Issuer or its property or such other
obligor, or in case of any other comparable judicial proceedings relative to
the Issuer or other obligor upon the Securities, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the Principal of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether
the Trustee shall have made any demand pursuant to the provisions of this
Section, shall be entitled and empowered, by intervention in such proceedings
or otherwise.

(a) to file and prove a claim or claims for
the whole amount of Principal and interest owing and
unpaid in respect of the Securities, and to file such
other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any
claim for payments due the Trustee under Section 5.6
hereof and each predecessor Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of
all reasonable expenses and liabilities incurred, and all
reasonable advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence or
bad faith) and of the Securityholders allowed in any
judicial proceedings relative to the Issuer or other
obligor upon the Securities, or to the creditors or
property of the Issuer or such other obligor.

(b) unless prohibited by applicable law and
regulations, to vote on behalf of the Holders of the
Securities in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or person
performing similar functions in comparable proceedings,
and

(c) to collect and receive any moneys or
other property payable or deliverable on any such claims,
and to distribute all amounts received with respect to the
claims of the Securityholders and of the Trustee on their
behalf, and any trustee, receiver, or liquidator,
custodian or other similar official is hereby authorized
by each of the Securityholders to make payments to the
Trustee, and, in the event that the Trustee shall consent
to the making of payments directly to the Securityholders,
to pay to the Trustee such amounts as shall be sufficient
to cover payments due the Trustee under Section 5.6
hereof, each predecessor Trustee and their respective
agents, attorneys and counsel, and all other reasonable
expenses and liabilities incurred, and all reasonable
advances made, by the Trustee and each predecessor Trustee
except as a result of negligence or bad faith.

-25-
<PAGE> 31
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Securityholders in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar person.

All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Trustee
without the possession of any of the Securities or the production thereof on
any trial or other proceedings relative thereto, and any such action or
proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee (including, but not limited to, payments due the Trustee
under Section 5.6 hereof) and their respective agents and attorneys, shall be
for the ratable benefit of the Holders of the Securities.

In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) the Trustee shall be held to represent all
the Holders of the Securities, and it shall not be necessary to make any
Holders of the Securities parties to any such proceedings.

SECTION 4.3 Application of Proceeds. Any moneys
collected by the Trustee pursuant to this Article shall be applied in the
following order at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys on account of Principal or interest, upon
presentation of the several Securities and stamping (or otherwise noting)
thereon the payment, or issuing Securities in reduced principal amounts in
exchange for the presented Securities if only partially paid, or upon surrender
thereof if fully paid:

FIRST: To the payment of costs and expenses,
including reasonable compensation (including, but not
limited to, payments due the Trustee under Section 5.6
hereof) to the Trustee and each predecessor Trustee and
their respective agents and attorneys and of all
reasonable expenses and liabilities incurred, and all
reasonable advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or
bad faith;

SECOND: Subject to Article 12 herein, in case
the Principal of the Securities shall not have become and
be then due and payable, to the payment of interest in
default in the order of the maturity of the installments
of such interest, with interest (to the extent that such
interest has been collected by the Trustee) upon the
overdue installments of interest at the same rate as the
rate of interest specified in the Securities, such
payments to be made ratably to the persons entitled
thereto, without discrimination or preference;

THIRD: In case the Principal of the Securities
shall have become and shall be then due and payable, to
the payment of the whole amount then owing and unpaid upon
all the Securities for

-26-
<PAGE> 32
Principal and interest, with interest upon the overdue
principal, and (to the extent that such interest has been
collected by the Trustee) upon overdue installments of
interest at the same rate as the rate of interest specified
in the Securities; and in case such moneys shall be
insufficient to pay in full the whole amount so due and
unpaid upon the Securities, then to the payment of such
Principal and interest, without preference or priority of
Principal over interest, or of interest over Principal, or
of any installment of interest over any other installment
of interest, or of any Security over any other Security,
ratably to the aggregate of such Principal and accrued and
unpaid interest; and

FOURTH: To the payment of the remainder, if any, to the
Issuer.

SECTION 4.4 Suits for Enforcement. In case an Event of
Default has occurred, has not been waived and is continuing, the Trustee may in
its discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.

SECTION 4.5 Restoration of Rights on Abandonment of
Proceedings. In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the
Trustee, then and in every such case the Issuer and the Trustee shall be
restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Issuer, the Trustee and the Securityholders
shall continue as though no such proceedings had been taken.

SECTION 4.6 Limitations on Suits by Securityholders. No
Holder of any Security shall have any right by virtue or by availing of any
provision of this Indenture to institute any action or proceeding at law or in
equity or in bankruptcy or otherwise upon or under or with respect to this
Indenture, or for the appointment of a trustee, receiver, liquidator, custodian
or other similar official or for any other remedy hereunder, unless such Holder
previously shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
not less than 25% in aggregate principal amount of the Securities then
Outstanding shall have made written request upon the Trustee to institute such
action or proceedings in its own name as trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby and the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action or proceedings and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 4.8; it being understood and intended, and being
expressly covenanted by the taker and Holder of every Security with every other
taker and Holder and the Trustee, that no one or more Holders of Securities
shall have any right in any manner whatever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holder of Securities, or to obtain or seek to obtain priority over a
preference to any other such Holder or to

-27-
<PAGE> 33
enforce any right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all Holders of Securities.
For the protection and enforcement of the provisions of this Section, each and
every Securityholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.

SECTION 4.7 Powers and Remedies Cumulative; Delay or
Omission Not Waiver of Default. Except as provided in Section 2.6, no right or
remedy herein conferred upon or reserved to the Trustee or to the
Securityholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

No delay or omission of the Trustee or of any Holder of
any of the Securities to exercise any right or power accruing upon any Event of
Default occurring and continuing as aforesaid shall impair any such right or
power or shall be construed to be a waiver of any such Event of Default or any
acquiescence therein; and, subject to Section 4.6, every power and remedy given
by this Indenture or by law to the Trustee or to the Securityholders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Securityholders.

SECTION 4.8 Control by Securityholders. The Holders of a
majority to aggregate principal amount of the Securities at the time
Outstanding shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee by this Indenture;
provided that such direction shall not be otherwise than in accordance with law
and the provisions of this Indenture and provided further that (subject to the
provisions of Section 5.1) the Trustee shall have the right to decline to
follow any such direction if the Trustee, being advised by counsel, shall
determine that the action or proceeding so directed may not lawfully be taken
or if the Trustee in good faith by its board of directors, the executive
committee, or a trust committee of directors or Responsible Officers of the
Trustee shall determine that the action or proceedings so directed would expose
the Trustee to personal liability or if the Trustee in good faith shall so
determine that the actions or forebearances specified in or pursuant to such
direction shall be unduly prejudicial to the interest of Holders of the
Securities not joining in the giving of said direction, it being understood
that (subject to Section 5.1) the Trustee shall have no duty to ascertain
whether or not such actions or forebearances are unduly prejudicial to such
Holders.

Nothing in this Indenture shall impair the right of the
Trustee in its discretion to take any action deemed proper by the Trustee and
which is not inconsistent with such direction by Securityholders.

SECTION 4.9 Waiver of Past Defaults. Prior to the
declaration of the maturity of the Securities as provided in Section 4.1, the
Holders of a majority in aggregate principal amount of the Securities at the
time Outstanding may on behalf of the Holders of all the Securities waive any
past default or Event of Default hereunder and its consequences, except a
default (a) in the payment of principal of or interest on any of the Securities
or (b) in respect of a covenant or provision hereof which cannot be modified or
amended without the consent of the Holder of the Security affected. In

-28-
<PAGE> 34
the case of any such waiver, the Issuer, the Trustee and the Holders of the
Securities shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.

Upon any such waiver, such default shall cease to exist
and be deemed to have been cured and not to have occurred, and any Event of
Default arising therefrom shall be deemed to have been cured, and not to have
occurred for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon.

ARTICLE FIVE

CONCERNING THE TRUSTEE

SECTION 5.1 Duties and Responsibilities of the Trustee; During
Default; Prior to Default. The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived) the Trustee shall exercise such
of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.

No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that

(a) prior to the occurrence of an Event of Default
and after the curing or waiving of all such Events of Default
which may have occurred:

(i) the duties and obligations of the Trustee
shall be determined solely by the express provisions of
this Indenture, and the Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and

(ii) in the absence of bad faith on the part
of the Trustee, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in
the case of any such statements, certificates or opinions
which by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they
conform to the requirements of this Indenture;

(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or
Responsible Officers of

-29-
<PAGE> 35
the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and

(c) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than
a majority in principal amount of the Securities at the time
Outstanding relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under
this Indenture.

None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there shall be reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.

This Section 5.1 is in furtherance of and subject to Sections 315
and 316 of the Trust Indenture Act of 1939.

SECTION 5.2 Certain Rights of the Trustee. In furtherance of and
subject to the Trust Indenture Act of 1939, and subject to Section 5.1:

(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture,
note, coupon, security or other paper or document believed by it
to be genuine and to have been signed or presented by the proper
party or parties;

(b) any request, direction, order or demand of the
Issuer mentioned herein shall be sufficiently evidenced by an
Officers' Certificate (unless other evidence in respect thereof be
herein specifically prescribed); and any resolution of the Board
of Directors may be evidenced to the Trustee by a copy thereof
certified by the secretary or an assistant secretary of the
Issuer;

(c) the Trustee may consult with counsel and any
advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted to be taken by it hereunder in good faith and
in accordance with such advice or Opinion of Counsel;

(d) the Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this
Indenture at the request, order or direction of any of the
Securityholders pursuant to the provisions of this Indenture,
unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;

(e) the Trustee shall not be liable for any action
taken or omitted by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred
upon it by this Indenture;

-30-
<PAGE> 36
(f) prior to the occurrence of an Event of Default
hereunder and after the curing or waiving of all Events of
Default, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing
so to do by the Holders of not less than a majority in aggregate
principal amount of the Securities then Outstanding; provided
that, if the payment within a reasonable time to the Trustee of
the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expenses or liabilities
as a condition to proceeding; the reasonable expenses of every
such examination shall be paid by the Issuer or, if paid by the
Trustee or any predecessor trustee, shall be repaid by the Issuer
upon demand; and

(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly
or by or through agents or attorneys not regularly in its employ
and the Trustee shall not be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed
with due care by it hereunder.

SECTION 5.3 Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statments of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Issuer of any of the Securities or of the proceeds therof.

SECTION 5.4 Trustee and Agents May Hold Securities; Collections,
etc. The Trustee or any agent of the Issuer or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee or such agent and may
otherwise deal with the Issuer and receive, collect, hold and retain
collections from the Issuer with the same rights it would have if it were not
the Trustee or such agent.

SECTION 5.5 Moneys Held by Trustee. Subject to the provisions of
Section 9.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.

SECTION 5.6 Compensation and Indemnification of Trustee and Its
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, reasonalbe compensation (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) and the Issuer covenants and agrees to pay or
reimburse the Trustee and each predecessor Trustee upon its request for all
reasonable expenses, disbursements and

-31-
<PAGE> 37
advances incurred or made by or on behalf of it in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ), except to the extent any such expense,
disbursement or advance may arise from its negligence or bad faith. The Issuer
also covenants to indemnify the Trustee and each predecessor Trustee for, and
to hold it harmless against, any loss, liability or expense arising out of or
in connection with the acceptance or administration of this Indenture or the
trusts hereunder and its duties hereunder and the performance of its duties
hereunder, including the costs and expenses of defending itself against or
investigating any claim of liability in the premises, except to the extent any
such loss, liability or expense is due to its own negligence or bad faith. The
obligations of the Issuer under this Section to compensate and indemnify the
Trustee and each predecessor Trustee and to pay or reimburse the Trustee and
each predecessor Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture. Such additional indebtedness shall be a
senior claim and lien prior to that of the Securities upon all property and
funds held or collected by the Trustee as such, except funds held in trust for
the benefit of the Holders of particular Securities, and the Securities are
hereby subordinated to such senior claim.

SECTION 5.7 Right of Trustee to Rely on Officers' Certificate,
etc. Subject to Sections 5.1 and 5.2, whenever in the administration of the
trusts of this Indenture the Trustee shall deem it necessary or desirable that
a matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken, suffered or omitted by it
under the provisions of this Indenture upon the faith thereof.

SECTION 5.8 Persons Eligible for Appointment as Trustee. The
Trustee hereunder shall at all times be a corporation having a combined capital
and surplus of at least $100,000,000, and which is eligible in accordance with
the provisions of Section 310(a) of the Trust Indenture Act of 1939. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of a Federal, State or District of Columbia supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.

SECTION 5.9 Resignation and Removal; Appointment of Successor
Trustee. (a) The trustee may at any time resign by giving written notice of
resignation to the Issuer and by mailing notice thereof by first-class mail to
Holders of Securities at their last addresses as they shall appear on the
Security register. Upon receiving such notice of resignation, the Issuer shall
promptly appoint a successor trustee by written instrument in duplicate,
executed by authority of the Board of Directors, one copy of which instrument
shall be delivered to the resigning Trustee and one copy to the successor
trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment

-32-
<PAGE> 38
of a successor trustee, or any Securityholder who has been a bona fide Holder
of a Security or Securities for at least six months may, on behalf of himself
and all others similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such notice, if any,
as it may deem proper and prescribe, appoint a successor trustee.

(b) In case at any time any of the following shall occur:

(i) the Trustee shall fail to comply with the
provisions of Section 310(b) of the Trust Indenture Act of 1939,
after written request therefor by the Issuer or by any
Securityholder who has been a bona fide Holder of a Security or
Securities for at least six months; or

(ii) the Trustee shall cease to be eligible in
accordance with the provisions of Section 5.8 and shall fail to
resign after written request therefor by the Issuer or by any such
Securityholder; or

(iii) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver or
liquidator of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;

then, in any such case, the issuer may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors of the Issuer, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee, or,
subject to Section 315(e) of the Trust Indenture Act of 1939, any
Securityholder who has been a bona fide Holder of a Security or Securities for
at least six months may on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.

(c) The Holders of a majority in aggregate principal amount of
the Securities at the time Outstanding may at any time remove the Trustee and
appoint a successor trustee by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Issuer the evidence provided for in
Section 6.1 of the action in that regard taken by the Securityholders.

(d) Any resignation or removal of the Trustee and any
appointment of a successor trustee pursuant to any of the provisions of this
Section 5.9 shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 5.10.

SECTION 5.10 Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 5.9 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its

-33-
<PAGE> 39
predecessor hereunder, with like effect as if originally named as trustee
herein; but, nevertheless, on the written request of the Issuer or of the
successor trustee, upon payment of its charges then unpaid, the trustee ceasing
to act shall, subject to Section 9.4, pay over to the successor trustee all
moneys at the time held by it hereunder and shall execute and deliver an
instrument transferring to such successor trustee all such rights, powers,
duties and obligations. Upon request of any such successor trustee, the Issuer
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and powers.
Any trustee ceasing to act shall, nevertheless, retain a prior claim and lien
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 5.6.

Upon acceptance of appointment by a successor trustee as provided
in this Section 5.10, the Issuer shall mail notice thereof by first-class mail
to the Holders of Securities at their last addresses as they shall appear in
the Security register. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 5.9.
If the Issuer fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Issuer.

SECTION 5.11 Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under the provisions of Section 5.8, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor Trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have; provided,
that the right to adopt the certificate of authentication of any predecessor
Trustee or to authenticate Securities in the name of any predecessor Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.

ARTICLE SIX

CONCERNING THE SECURITYHOLDERS

SECTION 6.1 Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Securityholders may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such

-34-
<PAGE> 40
Securityholders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee. Proof of
execution of any instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Sections 5.1 and
5.2) conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Article.

SECTION 6.2 Proof of Execution of Instruments and of Holding of
Securities; Record Date. Subject to Sections 5.1 and 5.2, the execution of any
instrument by a Securityholder or his agent or proxy may be proved in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Securities shall be proved by the Security register or by a
certificate of the registrar thereof. The Company may set a record date for
purposes of determining the identity of Holders of Securities entitled to vote
or consent to any action referred to in Section 6.1, which record date may be
set at any time or from time to time by notice to the Trustee, for any date or
dates (in the case of any adjournment or resolicitation) not more than 60 days
nor less then five days prior to the proposed date of such vote or consent, and
thereafter, notwithstanding any other provisions hereof, only Holders of
Securities of record on such record date shall be entitled to so vote or give
such consent or to withdraw such vote or consent.

SECTION 6.3 Holders to be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
person in whose name any Security shall be registered upon the Security
register as the absolute owner of such Security (whether or not such Security
shall be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the principal
of and, subject to the provisions of this Indenture, interest on such Security
and for all other purposes; and neither the Issuer nor the Trustee nor any
agent of the Issuer or the Trustee shall be affected by any notice to the
contrary. All such payments so made to any such person, or upon his order,
shall be valid, and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for moneys payable upon any such Security.

SECTION 6.4 Securities Owned by Issuer Deemed Not Outstanding.
In determining whether the Holders of the requisite aggregate principal amount
of Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are owned by the Issuer or any other obligor on the
Securities or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer or any other obligor
on the Securities shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination, except that for the purpose of determining
whether the Trustee shall be protected in relying on any such direction,
consent or waiver only Securities which the Trustee knows are so owned shall be
so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Issuer or any other obligor upon the Securities or
any person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Issuer or any other obligor on the
Securities. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Trustee in accordance
with such advice. Upon

-35-
<PAGE> 41
request of the Trustee, the Issuer shall furnish to the Trustee promptly an
Officers' Certificate listing and identifying all Securities, if any, known by
the Issuer to be owned or held by or for the account of any of the
above-described persons; and, subject to Sections 5.1 and 5.2, the Trustee
shall be entitled to accept such Officers' Certificate as conclusive evidence
of the facts therein set forth and of the fact that all Securities not listed
therein are Outstanding for the purpose of any such determination.

SECTION 6.5 Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
6.1, of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities specified in this Indenture in connection
with such action, any Holder of a Security the serial number of which is shown
by the evidence to be included among the serial numbers of the Securities the
Holders of which have consented to such action may, by filing written notice at
the Corporate Trust Office and upon proof of holding as provided in this
Article, revoke such action so far as concerns such Security. Except as
aforesaid any such action taken by the Holder of any Security shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of such Security and of any Securities issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon any such Security. Any action taken by the Holders of the percentage in
aggregate principal amount of the Securities specified in this Indenture in
connection with such action shall be conclusively binding upon the Issuer, the
Trustee and the Holders of all the Securities.

ARTICLE SEVEN

SUPPLEMENTAL INDENTURES

SECTION 7.1 Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a resolution of its Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:

(a) to convey, transfer, assign, mortgage or pledge
to the Trustee as security for the Securities any property or
assets;

(b) to evidence the succession of another corporation
to the Issuer, or successive successions, and the assumption by
the successor corporation of the covenants, agreements and
obligations of the Issuer pursuant to Article Eight;

(c) to add to the covenants of the Issuer such
further covenants, restrictions, conditions or provisions as its
Board of Directors and the Trustee shall consider to be for the
protection of the Holders of Securities, and to make the
occurrence, or the occurrence and continuance, of a default in any
such additional covenants, restrictions, conditions or provisions
an Event of Default permitting the enforcement of all or any of
the several remedies provided in this Indenture as herein set
forth; provided, that in respect of any such additional covenant,
restriction, condition or provision such supplemental indenture
may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon

-36-
<PAGE> 42
such an Event of Default or may limit the remedies available to
the Trustee upon such an Event of Default or may limit the right
of the Holders of a majority in aggregate principal amount of the
Securities to waive such an Event of Default;

(d) to cure any ambiguity, omission, defect or
inconsistency or to correct or supplement any provision contained
herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture; or to make such other provisions in regard
to matters or questions arising under this Indenture or under any
supplemental indenture as the Board of Directors may deem
necessary or desirable and which shall not adversely affect the
interests of the Holders of the Securities;

(e) to provide for the issuance under this Indenture
of Securities in coupon form (including Securities registrable as
to principal only) and to provide for exchangeability of such
Securities with Securities issued hereunder in fully registered
form, and to make all appropriate changes for such purpose and to
provide for adjustment of conversion rights pursuant to Section
13.6; and

(f) to provide for uncertificated Securities in
addition to certificated Securities.

The Trustee is hereby authorized to join in the execution of any
such supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities at the time Outstanding, notwithstanding any of the provisions of
Section 7.2.

SECTION 7.2 Supplemental Indentures With Consent of
Securityholders. With the consent (evidenced as provided in Article Six) of
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding, the Issuer, when authorized by a resolution
of its Board of Directors, and the Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner the rights of the Holders of the Securities; provided, that no
such supplemental indenture shall (a) waive a default in payment of the
principal of or interest on a Security or extend the final maturity of any
Security, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, or reduce any amount payable on
redemption thereof or impair or affect the right of any Securityholder to
institute suit for the payment or conversion thereof, or change the amount or
time of any payment required by Section 11.5, or materially and adversely
affect the right to convert the Securities or the right to require the Issuer
to redeem the Securities upon a Change of Control (as defined in

-37-
<PAGE> 43
Section 14.3) in accordance herewith without the consent of the Holder of the
Security so affected, provided, no consent of any Holder of any Security shall
be necessary under this Section 7.2 to permit the Trustee and the Company to
execute supplemental indentures pursuant to Section 7.1(e) and Section 13.6 of
this Indenture or (b) modify any provision of this Indenture so as to affect
adversely the rights of any Holder of Senior Indebtedness at the time
outstanding to the benefits of subordination hereunder without the consent of
such Holder.

Upon the request of the Issuer, accompanied by a copy of a
resolution of the Board of Directors certified by the Secretary or an Assistant
Secretary of the Issuer authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the consent of
Securityholders and other documents, if any, required by Section 6.1 the
Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.

It shall not be necessary for the consent of the Securityholders
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.

Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Issuer
shall mail a notice thereof by first-class mail to the Holders of Securities at
their addresses as they shall appear on the registry books of the Issuer,
setting forth in general terms the substance of such supplemental indenture.
Any failure of the Issuer to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such supplemental
indenture.

SECTION 7.3 Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer and the Holders of Securities
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.

SECTION 7.4 Documents to Be Given to Trustee. The Trustee,
subject to the provisions of Sections 5.1 and 5.2, shall receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any such
supplemental indenture complies with the applicable provisions of this
Indenture.

SECTION 7.5 Notation on Securities in Respect of Supplemental
Indentures. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee as to any matter provided for by such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any modification

-38-
<PAGE> 44
of this Indenture contained in any such supplemental indenture may be prepared
by the Issuer, authenticated by the Trustee and delivered in exchange for the
Securities then Outstanding.

SECTION 7.6 Compliance with Trust Indenture Act. Every amendment
to or supplement of this Indenture or the Securities shall comply with the
Trust Indenture Act of 1939 as then in effect.

ARTICLE EIGHT

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

SECTION 8.1 Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions. The Issuer shall not merge with or
into or consolidate with any corporation, partnership, or other entity or sell,
assign, lease or transfer all or substantially all of its properties and assets
to any other Person unless (i) either the Issuer shall be the continuing
corporation, or the successor entity or the Person which acquires by sale,
lease or conveyance all or substantially all the assets of the Issuer (if other
than the Issuer) shall be a corporation or partnership organized under the laws
of the United States of America or any State thereof or the District of
Columbia and shall expressly assume the due and punctual payment of the
principal of and interest on all the Securities, according to their tenor, and
the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Issuer, shall
be expressly assumed, by supplemental indenture satisfactory in form to the
Trustee, executed and delivered to the Trustee, by such entity, and (ii)
immediately after giving effect to such transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing.

SECTION 8.2 Successor Corporation Substituted. In case of any
such consolidation, merger, sale or conveyance, and following such an
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Issuer, with the same effect as if it had
been named herein.

Such successor corporation may cause to be signed, and may issue
either in its own name or in the name of the Issuer prior to such succession
any or all of the Securities issuable hereunder which theretofore shall not
have been signed by the Issuer and delivered to the Trustee; and, upon the
order of such successor corporation, instead of the Issuer, and, subject to all
the terms, conditions and limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver any Securities which previously shall have
been signed and delivered by the officers of the Issuer to the Trustee for
authentication, and any Securities which such successor corporation thereafter
shall cause to be signed and delivered to the trustee for that purpose. All of
the Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter issued
in accordance with the terms of this Indenture as though all of such Securities
had been issued at the date of the execution hereof.

In case of any such consolidation, merger, sale, lease or
conveyance such changes in phraseology and form (but not in substance) may be
made in the Securities thereafter to be issued as may be appropriate.

-39-
<PAGE> 45
In the event of any such sale or conveyance (other than a
conveyance by way of lease) the Issuer or any successor corporation which shall
theretofore have become such in the manner described in this Article shall be
discharged from all obligations and covenants under this Indenture and the
Securities and may be liquidated and dissolved.

SECTION 8.3 Officers' Certificate and Opinion of Counsel to
Trustee. In connection with any consolidation, merger, sale, assignment,
transfer or lease contemplated by this Article Eight, the Issuer shall deliver,
or cause to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, (a) an Officers' Certificate stating that such
consolidation, merger, sale, assignment, transfer or lease and the supplemental
indenture in respect thereto comply with this Article, that all conditions
herein relating to such transaction have been complied with and whether or not
such transaction is a Change of Control under Section 14.3 and (b) an Opinion
of Counsel that such transaction complies with the applicable provisions of
Section 8.1(i) of this Indenture.

ARTICLE NINE

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

SECTION 9.1 Satisfaction and Discharge of Indenture. If at any
time (a) the Issuer shall have paid or cause to be paid the principal of and
interest on all the Securities Outstanding hereunder, as and when the same
shall have become due and payable, or (b) the Issuer shall have delivered to
the Trustee for cancellation all Securities theretofore authenticated (other
than any Securities which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section 2.6) or (c)(i) all such
securities not theretofore delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption under arrangements satisfactory to
the Trustee for the giving of notice of redemption, and (ii) the Issuer shall
have irrevocably deposited or caused to be deposited with the Trustee as trust
funds the entire amount in cash (other than moneys repaid by the Trustee or any
paying agent to the Issuer in accordance with Section 9.4) or direct
non-callable obligations of the United States of America backed by its full
faith and credit, maturing as to Principal and interest in such amounts and at
such times as will insure the availability of cash sufficient to pay at
maturity all such Securities not theretofore delivered to the Trustee for
cancellation, including Principal and interest due or to become due to such
date of maturity as the case may be, and if, in any such case, the Issuer shall
also pay or cause to be paid all other sums payable hereunder by the Issuer,
then this Indenture shall cease to be of further effect (except as to (i)
rights of registration of transfer, conversion and exchange, and the Issuer's
right to optional redemption, (ii) substitution of apparently mutilated,
defaced, destroyed, lost or stolen Securities, (iii) rights of Holders to
receive payments of Principal thereof and interest thereon, upon the original
stated due dates therefor (but not upon acceleration), (iv) the rights,
obligations and immunities of the Trustee hereunder (including, without
limitation, Section 5.6 herein) and (v) the rights of the Securityholders as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them), and the Trustee, on demand of the Issuer
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Issuer, shall execute proper instruments acknowledging
such satisfaction of and discharging this Indenture provided, that the rights
of Holders of the Securities to receive amounts in

-40-
<PAGE> 46
respect of Principal of and interest on the Securities held by them shall not
be delayed longer than required by then-applicable mandatory rules or policies
of any securities exchange upon which the Securities are listed.

The Issuer agrees to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred and to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Securities. Indemnity
provided the Trustee in Section 5.6 hereof shall survive the termination
hereof.

SECTION 9.2 Application by Trustee of Funds Deposited for Payment
of Securities. Subject to Section 9.4, all moneys deposited with the Trustee
pursuant to Section 9.1 shall be held in trust and applied by it to the
payment, either directly or through any paying agent (including the Issuer
acting as its own paying agent), to the Holders of the particular Securities
for the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law.

SECTION 9.3 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture all moneys
then held by any paying agent under the provisions of this Indenture shall,
upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon
such paying agent shall be released from all further liability with respect to
such moneys.

SECTION 9.4 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Two Years. Any moneys deposited with or paid to the Trustee or
any paying agent for the payment of the principal of or interest on any
Security and not applied but remaining unclaimed for two years after the date
upon which such principal or interest shall have become due and payable, shall,
upon the written request of the Issuer and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Issuer by the Trustee or such paying agent, and the
Holder of such Security shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property laws,
thereafter look only to the Issuer for any payment which such Holder may be
entitled to collect, and all liability of the Trustee or any paying agent with
respect to such moneys shall thereupon cease; provided, however, that the
Trustee or paying agent may, at the expense of the Issuer, cause to be mailed
to such Holders notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
mailing, any unclaimed moneys shall be returned to the Issuer.

ARTICLE TEN

MISCELLANEOUS PROVISIONS

SECTION 10.1 Incorporators, Stockholders, Officers and Directors
of Issuer Exempt from Individual Liability. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had
against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of the Issuer

-41-
<PAGE> 47
or of any successor, either directly or through the Issuer or any successor,
under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Securities by the Holders thereof and as part of the
consideration for the issue of the Securities.

SECTION 10.2 Provisions of Indenture for the Sole Benefit of
Parties and Securityholders. Nothing in this Indenture or in the Securities,
expressed or implied, shall give or be construed to give to any person, firm or
corporation, other than the parties hereto and their successors and the Holders
of Senior Indebtedness and the Holders of the Securities, any legal or
equitable right, remedy or claim under this Indenture or under any covenant or
provision herein contained, all such covenants and provisions being for the
sole benefit of the parties hereto and their successors and the Holders of
Senior Indebtedness and of the Holders of the Securities.

SECTION 10.3 Successors and Assigns of Issuer Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or in behalf of the Issuer shall bind its successors and assigns,
whether so expressed or not.

SECTION 10.4 Notices and Demands on Issuer, Trustee and
Securityholders. Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the Holders
of Securities to or on the Issuer may be given or served by being deposited
postage prepaid, first-class mail (except as otherwise specifically provided
herein) addressed (until another address of the Issuer is filed by the Issuer
with the Trustee) to Quanex Corporation, 1900 West Loop South, Suite 1500,
Houston, Texas 77027. Any notice, direction, request or demand by the Issuer
or any Securityholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made at the Corporate
Trust Office.

Where this Indenture provides for notice to Holders, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Security register. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.

In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Issuer
and Securityholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.

-42-
<PAGE> 48
SECTION 10.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent provided for in this Indenture relating
to the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent have
been complied with, except that in the case of any such application or demand
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or demand,
no additional certificate or opinion need be furnished.

Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture shall include (a) a statement that the
person making such certificate or opinion has read such covenant or condition,
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based, (c) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with and (d) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.

Any certificate, statement or opinion of an officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters information with respect to which is
in the possession of the Issuer, upon the certificate, statement or opinion of
or representations by an officer or officers of the Issuer, unless such counsel
knows that the certificate, statement or opinion or representations with
respect to the matters upon which his certificate, statement or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care should
know that the same are erroneous.

Any certificate, statement or opinion of an officer of the Issuer
or of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.

Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.

SECTION 10.6 Payments Due on Saturdays, Sundays and Holidays. If
the date of maturity of interest on or principal of the Securities or the date
fixed for redemption of any Security shall not be a Business Day, then payment
of interest or principal need not be made on such date, but may be made on the
next succeeding

-43-
<PAGE> 49
Business Day with the same force and effect as if made on the date of maturity
or the date fixed for redemption, and no interest shall accrue for the period
after such date.

SECTION 10.7 Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision included in
this Indenture by operation of Sections 310 to 317, inclusive, of the Trust
Indenture Act of 1989 (an "incorporated provision"), such incorporated
provision shall control.

SECTION 10.8 New York Law to Govern. This Indenture and each
Security shall be deemed to be a contract under the laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
said State without regard to principles of conflicts of laws, except as may
otherwise be required by mandatory provisions of law.

SECTION 10.9 Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.

SECTION 10.10 Effect of Headings. The Article and Section
headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

SECTION 11.1 Right of Optional Redemption; Prices. The Issuer at
its option may, at any time on or after June 30, 1995, redeem all, or from time
to time any part of, the Securities upon payment of the optional redemption
prices set forth in the form of Security hereinabove recited, together with
accrued interest to the date fixed for redemption.

SECTION 11.2 Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Securities to be redeemed as a whole or in part
shall be given by mailing notice of such redemption by first-class mail,
postage prepaid, at least 20 days and not more than 50 days prior to the date
fixed for redemption to such Holders of Securities at their last addresses as
they shall appear upon the registry books. Any notice which is mailed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the Holder receives the notice. Failure to give notice by mail,
or any defect in the notice to the Holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.

The notice of redemption to each such Holder shall specify the
principal amount of each Security held by such Holder to be redeemed, the date
fixed for redemption, the redemption price, the place or places of payment,
that payment will be made upon presentation and surrender of such Securities,
that interest accrued to the date fixed for redemption will be paid as
specified in said notice and that on and after said date interest thereon or on
the portions thereof to be redeemed will cease to accrue and shall also specify
the conversion price then in effect and the date on which the

-44-
<PAGE> 50
right to convert such Securities or the portions thereof to be redeemed will
expire. In case any Security is to be redeemed in part only the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Security, a new Security or Securities in principal amount
equal to the unredeemed portion thereof will be issued.

The notice of redemption of Securities to be redeemed at the
option of the Issuer shall be given by the Issuer or, at the Issuer's request,
by the Trustee in the name and at the expense of the Issuer.

On or prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Issuer will deposit with the
Trustee or with one or more paying agents (or, if the Issuer is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
3.4) an amount of money sufficient to redeem on the redemption date all the
Securities so called for redemption (other than those theretofore surrendered
for conversion into Common Stock), at the appropriate redemption price,
together with accrued interest to the date fixed for redemption. If any
Security called for redemption is converted pursuant hereto, any money
deposited with the Trustee or any paying agent or so segregated and held in
trust for the redemption of such Security shall be paid to the Issuer upon the
Issuer's written request, or, if then held by the Issuer, shall be discharged
from such trust. If less than all the outstanding Securities are to be
redeemed the Issuer will deliver to the Trustee at least 45 days prior to the
date fixed for redemption an Officers' Certificate stating the aggregate
principal amount of Securities to be redeemed. If the date fixed for
redemption is on or after June 30, 1995, but prior to June 30, 1996, the Issuer
shall provide the Trustee at least 20 days prior to the date fixed for
redemption an Officers' Certificate to the effect that the last reported sales
price per share of Common Stock of the Issuer in its principal trading market
is at least 150% of the conversion price than in effect for any 20 trading days
within a period of 30 consecutive trading days ending no more than five days
prior to the date of the notice of redemption.

If less than all the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed either by lot or pro rata or in such
other manner as it shall deem appropriate and fair; provided, however, that if
Securities are selected for redemption by lot, the Trustee shall select
Securities for redemption in denominations of at least $1,000, except as may
otherwise be agreed between the Trustee and the Company. Securities may be
redeemed in part in integral multiples of $25 only. The Trustee shall promptly
notify the Issuer in writing of the Securities selected for redemption and, in
the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed. For all purposes of this Indenture, unless the
context otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal amount of such Security which has
been or is to be redeemed. If any Security selected for partial redemption is
surrendered for conversion after such selection, the converted portion of such
Security shall be deemed (so far as may be) to be the portion selected for
redemption. Upon any redemption of less than all the Securities, the Issuer
and the Trustee may treat as Outstanding Securities surrendered for conversion
during the period of 15 days next preceding the mailing of a notice of
redemption, and need not treat as Outstanding any Security authenticated and
delivered during such period in exchange for the unconverted portion of any
Security converted in part during such period.

-45-
<PAGE> 51
SECTION 11.3 Payment of Securities Called for Redemption. If
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Issuer shall default in the payment of such
Securities at the redemption price, together with interest accrued to said
date) interest on the Securities or portions of Securities so called for
redemption shall cease to accrue and, except as provided in Sections 5.5 and
9.4, such Securities shall cease from and after the date fixed for redemption
to be convertible into Common Stock and to be entitled to any benefit or
security under this Indenture, and the Holders thereof shall have no right in
respect of such Securities except the right to receive the redemption price
thereof and unpaid interest to the date fixed for redemption. On presentation
and surrender of such Securities at a place of payment specified in said
notice, said Securities or the specified portions thereof shall be paid and
redeemed by the Issuer at the applicable redemption price, together with
interest accrued thereon to the date fixed for redemption; provided, that any
semi-annual payment of interest becoming due on the date fixed for redemption
shall be payable to the Holders of such Securities registered as such on the
relevant record date subject to the terms and provisions of Section 2.4 hereof.

If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate
borne by the Security and such Security shall remain convertible into Common
Stock until the principal of such Security shall have been paid or duly
provided for.

Upon presentation of any Security redeemed in part only, the
Issuer shall execute and the Trustee shall authenticate and deliver to or on
the order of the Holder thereof, at the expense of the Issuer, a new Security
or Securities, of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.

SECTION 11.4 Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in a written statement signed by an authorized officer of the Issuer and
delivered to the Trustee at least 70 days prior to the last date on which
notice of redemption may be given as being owned of record and beneficially by,
and not pledged or hypothecated by either (a) the Issuer or (b) an entity
specifically identified in such written statement directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Issuer.

SECTION 11.5 Mandatory Redemption Provision. The Issuer shall
redeem twenty-five percent of the original principal amount of the Securities
on each of June 30, 2005 and June 30, 2006, upon the terms and subject to the
conditions set forth in the form of Security hereinabove recited.

-46-
<PAGE> 52
ARTICLE TWELVE

SUBORDINATION OF SECURITIES

SECTION 12.1 Agreement to Subordinate. The Issuer covenants and
agrees, and each Holder of Securities issued hereunder by his acceptance
thereof likewise covenants and agrees, that all Securities shall be issued
subject to the provisions of this Article; and each person holding any
Security, whether upon original issue or upon transfer, assignment or exchange
thereof accepts and agrees that the principal of and interest on all Securities
issued hereunder shall, to the extent and in the manner herein set forth, be
subordinated and subject in right to the prior payment in full of all Senior
Indebtedness.

SECTION 12.2 Payments to Securityholders. No payment on account
of principal of or interest on the Securities shall be made if at the time of
such payment or immediately after giving effect thereto (1) there shall exist a
default in any payment with respect to any Senior Indebtedness, or (2) there
shall have occurred an event of default (as defined in such Senior Indebtedness
or in the instrument under which the same is outstanding, other than a default
in the payment of amounts due thereon) with respect to any Senior Indebtedness
permitting the holders thereof to accelerate the maturity thereof, and such
event of default shall not have been cured or waived or shall not have ceased
to exist

Upon (i) any acceleration of the principal amount due on the
Securities or (ii) any payment of distribution of assets of the Issuer of any
kind or character, whether in cash, property or securities, to creditors upon
any dissolution or winding-up or total or partial liquidation or arrangement or
reorganization of the Issuer, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or
to become due upon all Senior Indebtedness shall first be paid in full, or
payment thereof provided for in accordance with its terms, before any payment
is made on account of the principal or interest on the indebtedness evidenced
by the Securities, and upon any such dissolution or winding-up or liquidation,
arrangement or reorganization any payment or distribution of assets of the
Issuer of any kind or character, whether in cash, property or securities, to
which the Holders of the Securities or the Trustee under this Indenture would
be entitled, except for the provisions hereof, shall be paid by the Issuer or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, or by the Holders of the Securities
or by the Trustee under this Indenture if received by them or it, directly to
the holders of Senior Indebtedness (pro rata to such holders on the basis of
the respective amounts of Senior Indebtedness held by such holders) or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any instruments evidencing any of such Senior Indebtedness
may have been issued (the selection of any such recipient on behalf of any
holder, in its individual capacity or otherwise, shall be at the sole
discretion of the Trustee), as their respective interests may appear, to the
extent necessary to pay all Senior Indebtedness in full (including, without
limitation, except to the extent, if any, prohibited by mandatory provisions of
law, post-petition interest, in any such proceedings), after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the Holders of the
indebtedness evidenced by the Securities or to the Trustee under this
Indenture.

-47-
<PAGE> 53
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Issuer of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee under this Indenture or the Holders of the Securities before all Senior
Indebtedness is paid in full or provision is made for such payment in
accordance with its terms, such payment or distribution shall be held in trust
for the benefit of and shall be paid over or delivered to the respective
representatives of the holders of such Senior Indebtedness, or to the trustee
or trustees under any indenture pursuant to which any instruments evidencing
any of such Senior Indebtedness may have been issued (the selection of any such
recipient on behalf of any holder, in its individual capacity or otherwise,
shall be at the sole discretion of the Trustee), as their respective interests
may appear, for application to the payment of all Senior Indebtedness remaining
unpaid until all such Senior Indebtedness shall have been paid in full in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.

For purposes of this Article, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Issuer as
reorganized or readjusted, or securities of the Issuer or any other corporation
provided for by a plan of arrangement, reorganization or readjustment, the
payment of which is subordinated (at least to the extent provided in this
Article with respect to the Securities) to the payment of all Senior
Indebtedness which may at the time be outstanding; provided, that (i) the
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any such arrangement, reorganization or readjustment, and (ii) the rights of
the holders of the Senior Indebtedness are not, without the consent of such
holders, altered by such arrangement, reorganization or readjustment. The
consolidation of the Issuer with, or the merger of the Issuer into, another
corporation or the liquidation or dissolution of the Issuer following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided in
Article Eight shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article Eight. Nothing in this Section shall
apply to claims of, or payments to, the Trustee under or pursuant to Article
Six, except as provided therein. This Section shall be subject to the further
provisions of Section 12.5.

SECTION 12.3 Subrogation of Securities. Subject to the payment in
full of all Senior Indebtedness, the Holders of the Securities shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Issuer
applicable to the Senior Indebtedness until the principal of and interest on
the Securities shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee on their behalf would be entitled except for the
provisions of this Article, and no payment over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by Holders of the Securities
or the Trustee on their behalf shall, as between the Issuer, its creditors
other than holders of Senior Indebtedness and the Holders of the Securities, be
deemed to be a payment by the Issuer to or on account of the Senior
Indebtedness; and no payments or distributions of cash, property or securities
to or for the benefit of the Securityholders pursuant to the subrogation
provision of this Article, which would otherwise have been paid to the holders
of Senior

-48-
<PAGE> 54
Indebtedness shall be deemed to be a payment by the Issuer to or for the
account of the Securities. It is understood that the provisions of this
Article are and are intended solely for the purpose of defining the relative
rights of the Holders of the Securities, on the one hand, and holders of the
Senior Indebtedness, on the other hand.

Nothing contained in this Article or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as between the Issuer, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities, the obligation of the Issuer, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders of the Securities and creditors of the Issuer other than the holders of
the Senior Indebtedness, nor shall anything herein or therein prevent the
Holder of any Security or the Trustee on his behalf from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of
Senior Indebtedness in respect of cash, property or securities of the Issuer
received upon the exercise of any such remedy.

Upon any payment or distribution of assets of the Issuer referred
to in this Article, the Trustee, subject to the provisions of Sections 5.1 and
5.2, and the Holders of the Securities shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding-up, liquidation, arrangement or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of the Securities, for the purpose
of ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Issuer, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article.

SECTION 12.4 Authorization by Securityholders. Each Holder of a
Security by his acceptance thereof authorizes the Trustee in his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any
and all such purposes.

SECTION 12.5 Notice to Trustee. The Issuer shall give prompt
written notice to the Trustee and to any paying agent of any fact known to the
Issuer which would prohibit the making of any payment of moneys to or by the
Trustee or any paying agent in respect of the Securities pursuant to the
provisions of this Article. Regardless of anything to the contrary contained
in this Article or elsewhere in this Indenture, the Trustee shall not be
charged with knowledge of the existence of any Senior Indebtedness or of any
default or event of default with respect to any Senior Indebtedness or of any
other facts which would prohibit the making of any payment of moneys to or by
the Trustee, unless and until the Trustee shall have received notice in writing
at its principal Corporate Trust Office to that effect signed by an officer of
the Issuer, or by a holder or agent of a holder of Senior Indebtedness who
shall have been certified by the Issuer or otherwise established to the
reasonable satisfaction of the Trustee to be such holder or agent, or by the
trustee under any indenture pursuant to which Senior Indebtedness shall be
outstanding, and, prior to the receipt of any such written notice, the Trustee
shall, subject to Section 5.1 and 5.2, be entitled to assume that no such facts
exist; provided that if on a date at least three Business Days prior

-49-
<PAGE> 55
to the date upon which by the terms hereof any such moneys shall become payable
for any purpose (including, without limitation, the payment of the principal
of, or interest on any Security) the Trustee shall not have received with
respect to such moneys the notice provided for in this Section, then,
regardless of anything herein to the contrary, the Trustee shall have full
power and authority to receive such moneys and to apply the same to the purpose
for which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such prior date.

Regardless of anything to the contrary herein, nothing shall
prevent (a) any payment by the Issuer or the Trustee to the Securityholders of
amounts in connection with a redemption of Securities if (i) notice of such
redemption has been given pursuant to Article Eleven prior to the receipt by
the Trustee of written notice as aforesaid, and (ii) such notice of redemption
is given not earlier than 60 days before the redemption date, of (b) any
payment by the Trustee to the Securityholders of amounts deposited with it
pursuant to Section 9.1.

The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Indebtedness or a trustee on behalf
of any such holder. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such person, the extent to which such person is
entitled to participate in such payment or distribution any other facts
pertinent to the rights of such person under this Article, and if such evidence
is not furnished the Trustee may defer any payment of such person pending
judicial determination as to the right of such person to receive such payment.

SECTION 12.6 Trustee's Relation to Senior Indebtedness. The
Trustee and any agent of the Issuer or the Trustee shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it in its individual or any other capacity to the
same extent as any other holder of Senior Indebtedness and nothing in this
Indenture shall deprive the Trustee or any such agent, of any of its rights as
such Holder. Nothing in this Article shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 5.6.

With respect to the Holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the Holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the Holders of Senior Indebtedness and, subject to
the provisions of Section 5.1 and 5.2, the Trustee shall not be liable to any
Holder of Senior Indebtedness if it shall pay over or deliver to Holders of
Securities, the Issuer or any other person moneys or assets to which any Holder
of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.

SECTION 12.7 No Impairment of Subordination. No right of any
present or future Holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way to be prejudiced or impaired by
any act or failure

-50-
<PAGE> 56
to act on the part of the Issuer or by any act or failure to act, in good
faith, by any such Holder, or by any noncompliance by the Issuer with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such Holder may have or otherwise be charged with.

ARTICLE THIRTEEN

CONVERSION OF SECURITIES

SECTION 13.1 Conversion Privilege. Subject to and upon
compliance with the provisions of this Article, at the option of the Holder
thereof, any Security may, at any time until and including, but not after the
close of business on June 30, 2007, or in case such Security or some portion
thereof shall be called for redemption prior to such date, then, with respect
to such Security or portion thereof as is so called, until and including, but
(if no default is made in making due provision for the payment of the
redemption price) not after, the close of business on, the fifth Business Day
prior to the date fixed for redemption, be converted, in whole, or in part in
integral multiples of $25 principal amount, into fully paid and non-assessable
shares of Common Stock issuable upon conversion of the Securities, at the
conversion price in effect at the Date of Conversion (as hereinafter defined)

SECTION 13.2 Exercise of Conversion Privilege. In order to
exercise the conversion privilege, the Holder of any Security to be converted
shall surrender such Security to the Issuer at any time during usual business
hours at its office or agency maintained for the purpose as provided in this
Indenture, accomplished by a fully executed written notice, in substantially
the form set forth on the reverse of the Security, that the Holder elects to
convert such Security or a stated portion thereof constituting an integral
multiple of $25 principal amount, and, if such Security is surrendered for
conversion during the period between the close of business of June 15 or
December 15 in any year and the opening of business on the following June 30 or
December 31 and has not been called for redemption on a redemption date within
such period (or on such June 30 or December 31), or within five days after such
period, accompanied also by payment of an amount equal to the interest payable
on such June 30 or December 31 on the principal amount of the Security being
surrendered for conversion. Such notice shall also state the name or names
(with address) in which the certificate or certificates for shares of Common
Stock shall be issued. Securities surrendered for conversion shall (if so
required by the Issuer or the Trustee) be duly endorsed by, or be accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Issuer duly executed by, the Holder or his attorney duly authorized in writing.
As promptly as practicable after the receipt of such notice and the surrender
of such Security as aforesaid, the Issuer shall, subject to the provisions of
Section 13.8, issue and deliver at such office or agency to such Holder, or on
his written order, a certificate or certificates for the number of full shares
of Common Stock issuable on such conversion of Securities in accordance with
the provisions of this Article and cash, as provided in Section 13.3, in respect
of any fraction of a share of Common Stock otherwise issuable upon such
conversion. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date (herein called the "Date of
Conversion") on which such notice shall have been received by the Issuer and
such Security shall have been surrendered as aforesaid, and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become

-51-
<PAGE> 57
on the Date of Conversion the Holder or Holders of record of the shares
represented thereby; provided, however, that any such surrender on any date
when the stock transfer books of the Issuer shall be closed shall constitute
the persons or persons in whose name or names the certificate or certificates
for such shares are to be issued as the recordholder or Holders thereof for all
purposes at the opening of business on the next succeeding day on which such
stock transfer books are open but such conversion shall nevertheless be at the
conversion price in effect at the close of business on the date when such
Security shall have been so surrendered with the conversion notice. In the
case of conversion of a portion, but less than all, of a Security, the Issuer
shall execute, and the Trustee shall authenticate and deliver to the Holder
thereof, at the expense of the Issuer, a Security or Securities in the
aggregate principal amount of the unconverted portion of the Security
surrendered. Except as otherwise expressly provided in this Indenture, no
payment or adjustment shall be made for interest accrued on any Security (or
portion thereof) converted or for dividends or distributions on any Common
Stock issued upon conversion of any Security, but a Holder of record of any
Security on June 15 or December 15 shall be entitled to receive interest on
such Security on the succeeding June 30 or December 31 notwithstanding the
conversion of such Security prior to such June 30 or December 31.

SECTION 13.3 Fractional Interests. No fractions of shares or
scrip representing fractions of shares shall be issued upon conversion of
Securities. If more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities so surrendered. If any fraction of a share
of Common Stock would, except for the provisions of this Section, be issuable
on the conversion of any Security or Securities, the Issuer shall make payment
of in lien thereof in an amount of United States dollars equal to the value of
such fraction computed on the basis of the last sale price of the Common Stock
as reported on the Composite Tape for New York Stock Exchange Listed Stocks (or
if not listed or admitted to trading on such Exchange, then on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading, or, if not listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers Automated
Quotations National Market System ("NASDAQ/NMS") or a similar organization if
NASDAQ/NMS is no longer reporting information) on the last Trading Day prior to
the Date of Conversion or if no such sale takes place on such day, the last
sale price for such day shall be the average of the closing bid and asked
prices regular way on the New York Stock Exchange (or if not listed or admitted
to trading on such Exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading, or if not listed or
admitted to trading on any national securities exchange, the average of the
highest bid and lowest asked prices on NASDAQ/NMS or a similar organization if
NASDAQ/NMS is no longer reporting information) for such day (any such last sale
price being hereinafter referred to as the "Last Sale Price"). If on such
Trading Day the Common Stock is not quoted by any such organization, the fair
value of such Common Stock on such day, as determined by the Board of
Directors, shall be used.

SECTION 13.4 Conversion Price. The conversion price per share of
Common Stock issuable upon conversion of the Securities shall initially be
$31.50.

-52-
<PAGE> 58
SECTION 13.5 Adjustment of Conversion Price. The conversion
price (herein called the "Conversion Price") shall be subject to adjustment
from time to time as follows:

(a) In case the Issuer shall (1) pay a dividend or make a
distribution in shares of Common Stock, (2) subdivide its outstanding shares of
Common Stock into a greater number of shares or (3) combine its outstanding
shares of Common Stock into a smaller number of shares, the Conversion Price in
effect immediately prior to such action shall be adjusted so that the Holder of
any Security thereafter surrendered for conversion shall be entitled to receive
the number of shares of Common Stock which he would have owned immediately
following such action had such Security been converted immediately prior
thereto. An adjustment made pursuant to this subsection (a) shall become
effective immediately, except as provided in subsection (f) below, after the
record date in the case of a dividend and shall become effective immediately
after the effective date in the case of a subdivision or combination.

(b) In case the Issuer shall issue rights or warrants to all
Holders of Common Stock entitling them (for a period not exceeding 45 days from
the date of such issuance) to subscribe for or purchase shares of Common Stock
at a price per share less than the current market price per share (as
determined pursuant to subsection (e) below) of the Common Stock on the record
date mentioned below, the Conversion Price shall be adjusted to a price,
computed to the nearest cent, so that the same shall equal to the price
determined by multiplying.

(1) the Conversion Price in effect immediately prior
to the date of issuance of such rights or warrants by a fraction, of which

(2) the numerator shall be (A) the number of shares
of Common Stock outstanding on the date of issuance of such rights or warrants,
immediately prior to such issuance, plus (B) the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such current market price
(determined by multiplying such total number of shares by the exercise price of
such rights or warrants and dividing the product so obtained by such current
market price), and of which

(3) the denominator shall be (A) the number of shares
of Common Stock outstanding on the date of issuance of such rights or warrants,
immediately prior to such issuance, plus (B) the number of additional shares of
Common Stock which are so offered for subscription or purchase.

Such adjustment shall become effective immediately, except as provided in
subsection (f) below, after the record date for the determination of Holder
entitled to receive such rights or warrants. However, upon the expiration of
any right or warrant to purchase Common Stock the issuance of which resulted in
an adjustment in the Conversion Price pursuant to this subsection (b), if any
such right or warrant shall expire and shall not have been exercised, the
Conversion Price shall be recomputed immediately upon such expiration and
effective immediately upon such expiration shall be increased to the price it
would have been (but reflecting any other adjustments to the Conversion Price
made pursuant to the provisions of this Section 13.5 after the issuance of such
rights or warrants) had the adjustment of the Conversion Price made upon the
issuance of such rights or warrants been made on the basis of offering for
subscription or purchase

-53-
<PAGE> 59
only that number of shares of Common Stock actually purchased upon the exercise
of such rights or warrants actually exercised.

(c) In case the Issuer shall distribute to substantially all
Holders of Common Stock evidences of indebtedness, equity securities other than
Common Stock or other assets (other than cash dividends paid out of retained
earnings of the Issuer), or shall distribute to substantially all Holders of
Common Stock rights or warrants to subscribe to securities (other than those
referred to in subsection (b) above), then in each such case the Conversion
Price shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date of
such distribution by a fraction of which the numerator shall be the current
market price per share (determined as provided in subsection (e) below) of
the Common Stock on the record date mentioned below less the then fair market
value (as determined by the Board of Directors, whose determination shall, if
made in good faith, be conclusive evidence of such fair market value) of the
portion of the assets so distributed or of such subscription rights or warrants
applicable to one share of Common Stock, and of which the denominator shall be
such current market price per share of the Common Stock. Such adjustment shall
become effective immediately, except as provided in subsection (f) below, after
the record date for the determination of stockholders entitled to receive such
distribution.

(d) In case the Issuer shall issue Common Stock at a price per
share less than the current market price per share (as determined pursuant to
subsection (c) below) of the Common Stock on the date of issuance or shall
issue securities convertible into or exchangeable for Common Stock (other than
pursuant to transactions described in subsection (c) above) for a consideration
per share of Common Stock deliverable upon conversion or exchange of such
securities that is less than the current market price per share (as determined
pursuant to subsection (e) below) of the Common Stock on the date of issuance
of such securities, then the Conversion Price in effect immediately prior to
each such issuance shall be adjusted in a manner consistent with the Conversion
Price adjustments contemplated in subsection (b) above. The adjustments shall
be made successively whenever any such issuance is made and shall become
effective immediately, except as provided in subsection (f) below, after such
issuance.

(e) For the purpose of any computation under subsections (b),
(c) and (d) above, the current market price per share of Common Stock on any
date shall be deemed to be the average of the Last Sale Prices of a share of
Common Stock for the five consecutive trading days selected by the Issuer
commencing not more than 20 Trading Days before, and ending not later than, the
earlier of the date in question and the date before the "ex" date with respect
to the issuance or distribution requiring such computation. If on any such
Trading Day the Common Stock is not quoted by any organization referred to in
the definition of Last Sale Price in Section 13.3, the fair value of the Common
Stock on such day, as determined by the Board of Directors, shall be used. For
purposes of this paragraph, the term "ex date", when used with respect to any
issuance or distribution, means the first date on which the Common Stock trades
regular way on the principal national securities exchange on which the Common
Stock is listed or admitted to trading (or if not so listed or admitted on
NASDAQ/NMS or a similar organization if NASDAQ/NMS is no longer reporting
trading information) without the right to receive such issuance or
distribution.

-54-
<PAGE> 60
(f) In any case in which this Section shall require that an
adjustment be made immediately following a record date, the Issuer may elect to
defer the effectiveness of such adjustment (but in no event until a date later
than the effective time of the event giving rise to such adjustment), in which
case the Issuer shall, with respect to any Security converted after such record
date and before such adjustment shall have become effective (i) defer paying
any cash payment pursuant to Section 13.3 or issuing to the Holder of such
Security the number of shares of Common Stock and other capital stock of the
Issuer issuable upon such conversion in excess of the number of shares of
Common Stock and other capital stock of the Issuer issuable thereupon only on
the basis of the Conversion Price prior to adjustment and (ii) not later than
five Business Days after such adjustment shall have become effective, pay to
such Holder the appropriate cash payment pursuant to Section 13.3 and issue to
such Holder the additional shares of Common Stock and other capital stock of
the Issuer issuable on such conversion.

(g) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1% of
the Conversion Price: provided, that any adjustments which by reason of this
subsection (g) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.

(h) In the event that, at any time as a result of an
adjustment made pursuant to subsections (a) or (c) of this Section 13.5, the
holder of any share of this Series thereafter surrendered for conversion shall
become entitled to receive any shares of the Company other than shares of the
Common Stock, thereafter the number of such other shares so receivable upon
conversion of any share of this Series shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in subsections (a)
through (g) of this Section 13.5, and the other provisions of this Article 13
with respect to the Common Stock shall apply on like terms to any such other
shares.

(i) Whenever the Conversion Price is adjusted as herein
provided, the Issuer shall promptly (i) file with the Trustee and each
conversion agent an Officers' Certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts
requiring such adjustment, which certificate shall be conclusive evidence of
the correctness of such adjustment, and (ii) mail or cause to be mailed a
notice of such adjustment to each Holder of Securities at his address as the
same appears on the registry books of the Issuer.

SECTION 13.6 Continuation of Conversion Privilege in Case of
Reclassification, Change, Merger, Consolidation or Sale of Assets. If any of
the following shall occur, namely: (a) any reclassification or change of
outstanding shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination), (b)
any consolidation or merger of the Issuer with or into any other Person, or any
other Person with or into the Issuer (other than a merger which does not result
in any reclassification, change, conversion, exchange or cancellation of
outstanding shares of Common Stock) or (c) sale or conveyance of all or
substantially all of the assets of the Issuer, then the Issuer, or such
successor or

-55-
<PAGE> 61
purchasing entity, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute
and deliver to the Trustee a supplemental indenture providing that the Holder
of each Security then outstanding shall have the right to convert such Security
into the kind and amount of shares of stock and other securities and property
(including cash) (receivable upon such reclassification, change, consolidation,
merger, sale or conveyance by a Holder of the number of shares of Common Stock
issuable upon conversion of such Security immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance assuming
such Holder of Common Stock of the Issuer (i) is not a Person with which the
Issuer consolidated or into which the Issuer merged or which merged into the
Issuer or to which such sale, transfer or conveyance was made, as the case may
be ("constituent Person") or an Affiliate of a constituent Person and (ii)
failed to exercise his rights of an election, if any, as to the kind or amount
of securities, cash and other property receivable upon such reclassification,
change, consolidation, merger, sale, transfer or conveyance (provided that if
the kind or amount of securities, cash, and other property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance is not the
same for each share of Common Stock of the Issuer held immediately prior to
such reclassification, change, consolidation, merger, sale, transfer or
conveyance by others than a constituent Person or an affiliate thereof and in
respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article. If, in the case of any such consolidation, merger, sale or
conveyance, the stock or other securities and property (including cash)
receivable thereupon by a Holder of shares of Common Stock includes shares of
stock or other securities and property (including cash) of a corporation other
than the successor or purchasing corporation, as the case may be, in such
consolidation, merger, sale or conveyance, then such supplemental indenture
shall also be executed by such other corporation and shall contain such
additional provisions to protect the interests of the Holders of the Securities
as the Board of Directors shall reasonably consider necessary by reason of the
foregoing. The provisions of this Section shall similarly apply to successive
consolidations, mergers, sales or conveyances.

Notice of the execution of each such supplemental indenture shall
be mailed to each Holder of Securities at his address as the same appears on
the registry books of the Issuer.

Neither the Trustee nor any conversion agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or securities or property receivable by Holders of Securities upon the
conversion of their Securities after any such reclassification, change,
consolidation, merger, sale or conveyance or to any adjustment to be made with
respect thereto, but, subject to the provisions of Sections 5.1 and 5.2, may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officers' Certificate (which the Issuer
shall be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.

-56-
<PAGE> 62
SECTION 13.7 Notice of Certain Events. In case:

(a) the Issuer shall declare a dividend (or any other
distribution) payable to the Holders of Common Stock otherwise
than in cash dividends paid out of retained earnings; or

(b) the Issuer shall authorize the granting to the
Holders of Common Stock of rights to subscribe for or purchase any
shares of stock of any class or of any other rights; or

(c) the Issuer shall authorize any reclassification
or change of the Common Stock (other than a subdivision or
combination of its outstanding shares of Common Stock), or any
consolidation or merger to which the Issuer is a party and for
which approval of any stockholders of the Issuer is required, or
the sale or conveyance of all or substantially all the property or
business of the Issuer; or

(d) there shall be proposed any voluntary or
involuntary dissolution, liquidation or winding-up of the Issuer;

then, the Issuer shall cause to be filed at the office or agency maintained for
the purpose of conversion of the Securities as provided in Section 3.2, and
shall cause to be mailed to each Holder of Securities, at his address as it
shall appear on the registry books of the Issuer, at least 20 days before the
date hereinafter specified (or the earlier of the dates hereinafter specified,
in the event that more than one date is specified), a notice stating the date
on which (1) a record is expected to be taken for the purpose of such dividend,
distribution or rights, or if a record is not to be taken, the date as of which
the Holders of Common Stock of record to be entitled to such dividend,
distribution or rights are to be determined, or (2) such reclassification,
change, consolidation, merger, sale, conveyance, dissolution, liquidation or
winding-up is expected to become effective and the date, if any is to be fixed,
as of which it is expected that Holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, change, consolidation, merger,
sale, conveyance, dissolution, liquidation or winding-up.

SECTION 13.8 Taxes on Conversion. The Issuer will pay any and
all documentary, stamp or similar taxes payable to the United States of America
or any political subdivision or taxing authority thereof or therein in respect
of the issue or delivery of shares of Common Stock on conversion of Securities
pursuant thereto; provided, however, that the Issuer shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issue or delivery of shares of Common Stock in a name other than that of the
Holder of the Securities to be converted and no such issue or delivery shall be
made unless and until the person requesting such issue or delivery has paid to
the Issuer the amount of any such tax or has established, to the satisfaction
of the Issuer, that such tax has been paid. The Issuer extends no protection
with respect to any other taxes imposed in connection with conversion of
Securities.

SECTION 13.9 Issuer to Provide Stock. The Issuer shall reserve,
free from preemptive rights out of its authorized but unissued shares,
sufficient shares to provide for the conversion of the Securities from time to
time as such Securities are presented for conversion, provided, that nothing
contained herein shall be construed to preclude

-57-
<PAGE> 63
the Issuer from satisfying its obligations in respect of the conversion of
Securities by delivery of repurchased shares of Common Stock which are held in
the treasury of the Issuer.

If any shares of Common Stock to be reserved for the purpose of
conversion of Securities hereunder require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon conversion, then the Issuer covenants that it
will in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be; provided, however, that nothing
in this Section shall be deemed to affect in any way the obligations of the
Issuer to convert Securities into Common Stock as provided in this Article.

Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value, if any, of the Common Stock, the
Issuer will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Issuer may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.

The Issuer covenants that all shares of Common Stock which may be
issued upon conversion of Securities will upon issue be fully paid and
non-assessable by the Issuer and free of preemptive rights.

SECTION 13.10 Disclaimer of Responsibility for Certain Matters.
Neither the Trustee nor any agent of the Trustee shall at any time be under any
duty or responsibility to any Holder of Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price, or with
respect to the Officers' Certificate referred to in Section 13.5(h), or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. Neither the Trustee nor any agent
of the Trustee shall be accountable with respect to the validity or value (or
the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Security; and neither the Trustee nor any conversion agent makes any
representation with respect thereto. Neither the Trustee nor any agent of the
Trustee shall be responsible for any failure of the Issuer to issue, register
the transfer of or deliver any shares of Common Stock or stock certificates or
other securities or property upon the surrender of any Security for the purpose
of conversion or, subject to Sections 5.1 and 5.2, to comply with any of the
covenants of the Issuer contained in this Article.

SECTION 13.11 Return of Funds Deposited for Redemption of
Converted Securities. Any funds which at any time shall have been deposited by
the Issuer or on its behalf with the Trustee or any other paying agent for the
purpose of paying the principal of and interest on any of the Securities and
which shall not be required for such purposes because of the conversion of such
Securities, as provided in this Article, shall after such conversion be repaid
to the Issuer by the Trustee or such other paying agent.

-58-
<PAGE> 64
ARTICLE FOURTEEN

RIGHT TO REQUIRE REDEMPTION

SECTION 14.1 Right to Require Redemption. If at any time there
shall occur any Change of Control (as defined below) of the Issuer, then each
Holder shall have the right, at such Holder's option, to require the Issuer to
redeem, and upon the exercise of such right the Issuer shall redeem, all or any
part of such Holder's Securities that is $25 or any integral multiple thereof,
on the date (the "Repurchase Date") that is 45 days after the date of the
Company Notice (as defined below) at a redemption price in cash equal to the
optional redemption prices set forth in the form of Security hereinabove
recited plus accrued and unpaid interest to the Repurchase Date (the
"Repurchase Price").

SECTION 14.2 Notices; Method of Exercising Redemption Right, etc.

(a) Unless the Issuer shall have theretofore called
for redemption all the Securities then Outstanding pursuant to
Article Eleven of the Indenture, on or before the 30th day after
the occurrence of a Change of Control, the Issuer or, at the
request of the Issuer, the Trustee, shall mail to all Holders of
record of the Securities a notice (the "Company Notice") of the
occurrence of the Change of Control and of the redemption right
set forth herein arising as a result thereof in the manner
provided in Section 10.4 of the Indenture. The Issuer shall also
deliver a copy of the Company Notice to the Trustee prior to or
promptly after the mailing of such Company Notice.

Each notice of a redemption right shall state:

(1) the Repurchase Date;

(2) the date by which the Securities with
respect to which such right is being exercised and the
irrevocable written notice referred to in Section 14.2(b)
must be delivered to the Trustee;

(3) the Repurchase Price and accrued
interest, if any;

(4) a description of the procedure which a
Holder must follow to exercise a redemption right
including a form of the irrevocable written notice
referred to in Section 14.2(b); and

(5) the Conversion Price (as defined in
Section 13.4 of the Indenture) then in effect, the date on
which the right to convert the principal amount of the
Securities to be redeemed will terminate and the place or
places where such Securities may be surrendered for
conversion.

No failure of the Issuer to give the foregoing notices or
any defect therein shall limit any Holder's right to exercise a
redemption right or affect the validity of the proceedings for the
redemption of Securities.

-59-
<PAGE> 65
(b) To exercise a redemption right, a Holder shall
deliver to the Trustee on or before the 30th day after the date of
the Company Notice (i) irrevocable written notice of the Holder's
exercise of such right, which notice shall set forth the name of
the Holder, the amount of the Securities to be redeemed, a
statement that an election to exercise the redemption right is
being made thereby, and (ii) the Securities with respect to which
the redemption right is being exercised, duly endorsed for
transfer to the Issuer. Securities held by a securities
depositary may be delivered in such other manner as may be agreed
to by such securities depositary and the Issuer or the Trustee.
Such written notice shall be irrevocable. Subject to the
provisions of paragraph (d) below, Securities surrendered for
redemption together with such irrevocable written notice shall
cease to be convertible from the date of delivery of such notice.
If the Repurchase Date falls after the record date and before the
following interest payment date, any Securities to be redeemed
must be accompanied by payment of an amount equal to the interest
thereon which the registered Holder thereof is to receive on such
interest payment date, and, notwithstanding such redemption, such
interest payment will be made by the Issuer to the registered
Holder thereof on the applicable record date.

(c) In the event a redemption right shall be
exercised in accordance with the terms hereof, the Issuer shall
pay or cause to be paid the Repurchase Price in cash, to the
Holder on the Repurchase Date.

(d) If any Security surrendered for redemption shall
not be so redeemed on the Repurchase Date, such Security shall be
convertible at any time from the Repurchase Date until redeemed
and, until redeemed, continue to bear interest to the extent
permitted by applicable law from the Repurchase Date at the same
rate borne by such Security. The Issuer shall pay to the Holder
of such Security the additional amounts arising from this Section
14.2(d) at the same time that it pays the Repurchase Price, and if
applicable, such Security shall remain convertible into Common
Stock until the Repurchase Price plus any additional amounts owing
on such Security shall have been paid or duly provided for.

(e) Any Security which is to be redeemed only in part
shall be surrendered at any office or agency of the Issuer
designated for that purpose pursuant to Section 3.2 (with, if the
Issuer or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Issuer
and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Issuer shall
execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or
Securities, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for
the unredeemed portion of the Security so surrendered.

SECTION 14.3 Certain Definitions. For purposes of this Article
Fourteen:

(a) the term "Subsidiary" means (i) any corporation
or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of
directors or other persons performing

-60-
<PAGE> 66
similar functions are at the time directly or indirectly owned by
the Issuer or (ii) any partnership of which more than 50% of the
partnership interests are owned by the Issuer or any Subsidiary;

(b) the term "beneficial owner" shall be determined
in accordance with Rule 13d-3, as in effect on the date of the
execution of the Indenture, promulgated by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended;

(c) the term "Person" shall include any syndicate or
group which would be deemed to be a "person" under Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, as in
effect on the date of the execution of this Indenture; and

(d) a "Change of Control" shall be deemed to have
occurred at such time as:

(i) any Person (other than the Issuer, any
Subsidiary of the Issuer or any employee benefit plan of
the Issuer) is or becomes the beneficial owner, directly
or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of
shares of capital stock of the Issuer entitling such
Person to exercise 50% or more of the total voting power
of all shares of capital stock of the Issuer entitled to
vote generally in the elections of directors (any shares
of voting stock of which such person or group is the
beneficial owner that are not then outstanding being
deemed outstanding for purposes of calculating such
percentage); or

(ii) any consolidation of the Issuer with, or
merger of the Issuer into, any other Person, any merger of
another Person into the Issuer, or any sale or transfer of
all or substantially all of the assets of the Issuer to
another Person (other than a merger (x) which does not
result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock or (y)
which is effected solely to change the jurisdiction of
incorporation of the Issuer and results in a
reclassification, conversion or exchange of outstanding
shares of Common Stock into solely shares of Common
Stock).

SECTION 14.4 Limitation on Right to Require Redemption.
Notwithstanding anything herein to the contrary, no Holder shall have any right
to require redemption pursuant to this Article Fourteen if either (A) the Last
Sale Price (or if on any such Trading Day the Common Stock is not quoted by any
organization referred to in the definition of Last Sale Price, the fair value
of the Common Stock on such day, as determined by the Board of Directors) on
any five Trading Days during the 10 Trading Day period immediately preceding
the date of the Change of Control shall equal or exceed 105% of the Conversion
Price with respect to such Securities in effect on such Trading Days or (B)
with respect to Section 14.3(d) above, all the consideration (excluding cash
payments for fractional shares) to be paid for the Common Stock in the
transaction or transactions constituting the Change of Control (i) has an
aggregate fair market value of at least 105% of the Conversion Price with
respect to such Securities in effect immediately prior to the closing of such

-61-
<PAGE> 67
transaction and (ii) consists of cash, securities traded on a national
securities exchange or quoted on the NASDAQ/NMS or a combination of cash and
securities and as a result of such transaction or transactions the Securities
become convertible solely into such common stock.

IN WITNESS, WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of June 30, 1995.

QUANEX CORPORATION

By:________________________________
Name:_________________________
Title:________________________

(CORPORATE SEAL)

Attest:

By:____________________

CHEMICAL BANK

By:________________________________
Name:_________________________
Title:________________________

(CORPORATE SEAL)

Attest:

By:____________________

-62-